Accounting Regulatory Bodies
There are many accounting regulatory bodies set up to protect the investors and consumers of all financial organizations. Four of these accounting regulatory bodies are the Securities and Exchange Commission (SEC), Financial Accounting Standards Board (FASB), International Accounting Standards Board (IASB), and Sarbanes-Oxley (SOX). The purpose of all of these governing entities is to provide useful information to outside agencies. They set standards to ensure that all companies are being consistent and truthful in their reporting.
The Securities and Exchange Commissions is a U.S. government agency that supervises the exchange of securities so as to protect investors against malpractice. “The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation” (U.S. Securities and Exchange Commission, 2008). In order for an organization to stay in compliance with the SEC the company must submit all meaningful financial and other information to the public through the SEC website called EDGAR.
The Financial Accounting Standards Board is a seven-member independent board consisting of accounting professionals who establish and communicate standards of financial accounting and reporting in the United States. FASB standards, known as generally accepted accounting principles (GAAP), govern the preparation of corporate financial reports and are recognized as authoritative by the Securities and Exchange Commission. “The mission of the FASB is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information” (fasb.org). Every publicly owned company must follow GAAP. In order to make sure that these companies are following GAAP they must get an independent audit every year where they are checked to make sure they are still in...