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

Professor Zeff [Accounting and Business, February 1999; p. 16] views the US Securities and Exchange Commission [SEC] as a 'control agency'. Examine this statement and some of the major issues currently facing the SEC.

Extracts from this document...

Introduction

Essay Question: Professor Zeff [Accounting and Business, February 1999; p. 16] views the US Securities and Exchange Commission [SEC] as a 'control agency'. Examine this statement and some of the major issues currently facing the SEC. Professor G. Muller classified the USA accounting system in 1967 as pragmatic1. It provides an efficient and effective service to business. Pragmatic is an independent discipline that develops on an ad hoc basis, normally when problems occur within industry. It tends to take place on a piecemeal basis feeding from judgement and trial-and-error.2 The UK also has a pragmatic system. Being a pragmatic system it develops without the influence of governments and economic theories.3 The USA has 50 federated states which agreed to adopt the overriding national laws regarding administration, economic, political and/or social advantage.4 No national company legislation like that of the Companies Act within the UK exist within the USA. There is also no exclusive accounting profession and no formulation and application of stock exchange reporting requirements. This is due each state having responsibility to create its own legislation concerning corporate regulations, almost total autonomy is vested in each states legislative authority. The only constraint to complete autonomy is the US Congress, the ultimate legislation assembly, who have the powers to override any aspects of corporate regulation enforcement. ...read more.

Middle

The threat of government intervention hangs over the SEC. For this reason the SEC has not hesitated to intervene when FASB are moving too slowly or in the wrong direction. In the past the SEC has imposed its own requirements, delayed or even overruled a private sector pronouncement.10 Even though the SEC has in the past overruled the FASB, it is said that "too few public companies had their annual reports reviewed by the SEC, with more than half....not being reviewed over a three year period..."11 This brings into question how dedicated is the SEC? Recent investigations by the SEC include, Spear, Leeds Kellogg, and a unit of Goldman Sachs; Bear Wagner.12 If the outcome goes against these companies it could result in the SEC rejecting their filing of accounts and therefore them becoming unregistered from the Stock Exchange. The investigations can be considered to be a very minor issue. More important current issues surrounding the SEC include their involvement in international standard setting. SEC is a member of the International Organization of Securities Commissions (IOSCO) who have been working with the International Accounting Standards Committee (IASC) to attempt to, "improve the IASC's standards so that they might become an acceptable framework for financial reporting in cross-border securities offerings".13 The outcomes from the discussions brought about three key elements that were agreed. ...read more.

Conclusion

It is therefore the SEC's job not to create, but to regulate the standards. The SEC has to control the FASB in terms of making sure they are not moving too slow or in the wrong direction. SEC have the powers to override any standards created by the FASB and to take action against companies who do not comply with the standards. It is for this reason that the SEC can be classed as being a "control agency", they have not been developing standards rather controlling the work of the FASB and making sure companies comply. Even though the SEC can be classed as a control agency it has not been that affective as shown by the scandals highlighted in Enron and WorldCom. Could it be said that SEC therefore should have been investigated themselves? Many issues surrounding the SEC comes from the implementation of International Accounting Standards. The IOSCO has been colluding with the IASC to come to an agreement on future standards. Even after this, problems have occurred, such as receiving pressure from companies to make standards less prescriptive, trying to not implement the IASC in order to stop companies from relocating to less demanding areas, and improving the reviewing of annual companies reports. The issues regarding International Accounting Standards may result in the US Congress intervening and therefore reducing its overriding status. ...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. In this assignment I am opening a tuck shop in the school grounds and ...

    By writing out all of these documents they can get exactly what you want and it will be very smoothly done. I believe that the business documents are in this order because they need to be easy to complete and in a smooth flow of documents so they can be easily and quickly done.

  2. The concept of financial statement

    According to the Companies Act 1985 financial statement must give minimum information of the company to the shareholders and it must show a 'true and fair view' of company's affair. It takes priority over other legislative, professional and stock exchange requirements.

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

    (Source: FRC 2000) Financial regulatory system in US: US Congress, the ultimate legislative assembly, which can override and/or inquire into the adequacy of corporate regulation enforcement. In the main, however, Congress has left accounting matters and corporate regulation to Securities and Exchange Commission (SEC), an independent regulatory body with both

  2. International reporting Standards.

    ISAC aims to: * make it easier for those participants of global markets to make sound economic decisions. * promote the use and rigorous application of these standards * bring about convergence of national accounting standards and provide high quality solutions (Eiteman et al, 2000).

  1. International Accounting Standarts

    While German commercial law asks for security in evaluation and prefers an under-evaluation, instead of over-evaluation, the IAS is more value oriented. The IAS is also more short term oriented in terms of actuality. An imaginable reason might be the financial short time investment (speculation), shareholders keep themselves busy with.

  2. Harmonisation of accounting standards in Europe

    and comparable information in general purpose financial statements".9 In addition, the IASB co-operates with national accounting standard-setters to achieve convergence in accounting standards around the world. The IASB is the body within the IASCF structure which develops and approves IFRSs.

  1. The Purpose of Keeping Accurate Accounts

    The directors are obliged under company law to prepare financial statements for each financial year and to present them annually to the Company's members in Annual General Meeting. The financial statements, of which the form and content is prescribed by the Companies Act 1985 and applicable accounting standards, must give

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

    * Hospital accident plan * Travel insurance * Business insurance * Life insurance * Bank accounts The number of different types of savings accounts available can be bewildering. They range from monthly savings plans through to lump sum investments. It's important of course to make sure that what you put your money into is exactly what you need.

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