Consequence of financial accounting fraud
4 FASB Vs. PCAOB (Student Post)
The SEC has relied on the private sector to establish and develop GAAP in the United States. Currently, the SEC recognizes the Financial Accounting Standards Board (FASB) as the designated organization for establishing GAAP.
As a consequence of financial accounting fraud in the early 2000s, Congress passed the SarbanesOxley Act of 2002. SOX created the Public Company Accounting Oversight Board (PCAOB).The SEC has oversight authoirty over PCAOB which is now recognized to set up the audit standard for all public traded companies.
SEC has largely relied on the private sector to set up standard for both accounting and auditing while remain its oversight role… The SEC since the early 2000s has at various times considered adopting IFRS or converging U.S. GAAP with IFRS. If the SEC chooses to switch from U.S. GAAP to IFRS, there may be major implications for U.S. firms and investors, which could be of interest to Congress in its oversight capacity of the SEC. (Gnanarajah, 2017)
It would be really interesting to see how SEC and Congress decide on the issue of GAAP and IFRS.
Reference
Gnanarajah. Raj (2017) Accounting and Auditing Regulatory Structure: U.S. and International. Retrieved from https://fas.org/sgp/crs/
#5 Objectives of Financial Reporting (Student Response)
The major objectives of financial reporting is to provide useful financial information about the reporting entity. The users of financial reporting are present and potential equity investors, lenders, and other creditors. Each user group looks for information that is useful for making decisions; Investors and creditors have the most and critical need for financial information. They are usually interested in the financial position of the entity and want to know that the entity is able to generate current and future net cash inflows. The result of this can be found calculating liquidity ratios such as the current ratio, quick ratio, working capital and networking capital ratio. They need this information to know if the company is able to meet its short and long term obligations.
Solution preview for the order on consequence of financial accounting fraud
APA
254 words