• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Ethical and Legal Obligations in Accounting The recent and past scandals of major corporations such as Enron, WorldCom, Qwest, Tyco, HealthSouth

Extracts from this document...

Introduction

Running head: Ethical and Legal Obligations in Accounting Ethical and Legal Obligations in Accounting David A. Beckham University of Phoenix ACC 539 Dr. Anthony J. Matias, MBA, CPA February 6, 2006 Ethical and Legal Obligations in Accounting The recent and past scandals of major corporations such as Enron, WorldCom, Qwest, Tyco, HealthSouth, Rite Aid, and Global Crossing to name a few of the biggest have brought a new awareness to the ethical and legal obligations of financial reporting. Although fair accounting principles and theories have been around for some time, it has not been so closely analyzed and scrutinized as it has been in the past 10 years. Generally accepted accounting principles or GAAP are rules which are used to prepare financial documents and statements in publicly traded and privately held companies in the United States. These generally accepted accounting principles are not the same for local and state governments which follow the GASB or Governmental Accounting Standards Board. In the United States as well as some modern countries who operate under the English common law system, the government does not set the standards of generally accepted accounting principles. ...read more.

Middle

The PCAOB helps to shore up confidence of investors and further the public interest in preparation of informative, fair and independent audit reports. The board was created primarily in response to the many accounting scandals that were occurring during this time. The most notable scandals at this time were WorldCom and Enron. The Sarbanes-Oxley act is an extension of power to the SEC giving the government more control and inputs on generally accepted accounting practices and principles. The generally accepted accounting principles and practices are important to consumers and investors of publicly traded companies. Without some reform and repair or the current practices, the public will loose confidence in American companies and start looking abroad to invest capital. Financial reporting in order to be useful and trusted should be useful to investors and creditors by presenting them with information that is relevant, reliable, comparable and consistent. These are the four basic qualities of financial accounting. (Wikipedia.com) In order for financial reporting to achieve these qualities, some basic assumptions must happen. ...read more.

Conclusion

This information is typically presented in the main body of financial statements where it is most notable and easy to pick up on. These guidelines and generally accepted accounting practices are the foundation of the modern day accounting systems. The overall goal of the auditing companies, accountants and government organizations is to bring back trust to the accounting profession and publicly traded organizations. In order to keep American investors and financiers in the US, we need to establish the trust again. Dishonest accounting practices not only hurt the immediate investors, creditors, business owners and employees, but it hurts our economy overall. Resources Colson, Rober H. (2004, November). Back to Basics. CPA Journal, Vol. 74 Issue 11, p80-80, 1p Flegm, Eugene H. (2005, February). On Solving the Problem, Not Being It: CPA Journal, Vol. 75 Issue 2, p12-14, 3p. http://www.wikipedia.com Marshall, D. et al. (2004). Accounting: What the Numbers Mean (6th ed.). New York: McGraw-Hill. Victor, George I. (2005, November). Current SEC and PCAOB Developments. CPA Journal, Vol. 75 Issue 11, p28-31, 4p, 1c ?? ?? ?? ?? Ethical and Legal Obligations 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. Compare and contrast the approach of the US and UK financial regulatory bodies and ...

    (Zeff, 1998). New York London Domestic $8.9 trillion �1.3 trillion ($2.1 trillion) Foreign $2.8 trillion �2.4 trillion ($3.8 trillion) Then in 1996, US Congress put the pressure on SEC to support the IASs. The Congress passed the National Securities Improvement Act, which state that SEC should enhance its support the

  2. Free essay

    planning personal finances

    An advantage is that you can increase the agreed amount if you want to but only up to a certain limit e.g. �250- �1000. Then again the interest charges are higher than other methods and you may end up paying much more than you originally borrowed.

  1. International Accounting Standarts

    Active accruals are set up for future payments that are going to be calculated for the former balancing period in order to hold the principle of allocation of expenses unrelated to accounting period. However, they are no assets, since they cannot be divested individually.

  2. Harmonisation of accounting standards in Europe

    The Directive cover both public and private companies in all EU countries. In 1978, the EC implemented the 4th Directive on the Format and Rules of Accounting, which harmonised the general layout and content of company financial statements. Although a limited number of national options were permitted, companies registered in

  1. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    If you move to another employer your fund will remain invested and will continue growing. The Occupational Pensions Regulatory Authority regulates company pensions, making sure that the funds are properly run and invested. It has a pension tracing service which may help if you have lost track of a company pension.

  2. Unit 5 Introduction to Accounting

    This depends on different factors. Like the project where it's being used for and the amount of security available to back the loan. Loans are most of the time granted for an extended period for purchase of capital items. A normal business could get a loan for 5 years, but

  1. The role of a conceptual framework

    (2002) An international comparison and evolution of financial accounting concepts statements, Vol.1, Iss. 2; pg.163, 22pgs). The preparation and presentation of financial statements "is referred to as its conceptual framework.", (http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=140805&d=101&dateformat=%o-%B [accessed 29th November 2005]). It is said that the "IASB conceptual framework was prepared under the International Accounting Standards Committee..", (Scott, R.

  2. Why Did Enron Fail?

    In October 2001, the third quarter results were published, showing a mysterious loss. This of course set the share price falling, as investors lost confidence about Enron's long term capabilities. This was the beginning of what was going to be a difficult few months for Enron, as different scandals and information was released.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work