Analysis of Regulations in Accounting

The point of view that Berenson has in this book is that the market should be more heavily regulated, that regulatory agencies should crack down harder on accountants, and that prosecuting and jailing offenders is the only way to stop bad behavior. While I agree with this point of view, I also believe that it will always be an ongoing battle. The world is in constant change – people, politicians, technology, companies, etc. – and the regulatory agencies will

SFAC No. 8 addresses the cost constraint on useful financial reporting, “Cost is a pervasive constraint that standard setters, as well as providers and users of financial information, should keep in mind when considering the benefits of a financial reporting requirement.” (SFAC No. 8 BC 3.47) However, the ability to place a dollar value and fully enumerate a cost or benefit is almost an impossible task for standard-setters. Additionally, there is no way to successfully identify and measure all of the economic consequences associated with a new standard. The FASB should be applauded though for advancing uniformity in accounting standards, however; uniform financial reporting suggests a one size fits all approach. “Smaller, non-publicly listed firms (and their auditors) argue that accounting standards are formulated mainly for larger, publicly traded firms” and that “compliance costs are disproportionately higher and the

Financial controls play an important role in ensuring the accuracy of reporting, eliminating fraud and

In the 1970’s, the SEC and the FASB were considering making accounting and financing regulations more important in the business

As the complexity of our financial economy develops it is important that our accounting standards progress in accordance. Accounting is very important to the development of the global and local economies. Accounting is basically the gathering, summarizing and presenting of financial information of an entity to interested internal, external and possible investors. This information should be presented in a non-bias way so that other people are able understand.

The accounting system in the US was strongly influenced by the SEC as opposed to a governmental influence. The SEC sells, exchanges and trades securities, protects investors while maintaining fair, orderly and efficient markets and ultimately facilitates capital formation (Pereira, 1992, p17). The US has the largest and one of the most important, stock exchanges in the world - the New York Stock Exchange located on Wall Street in New York City. This makes the US a huge market for investors world-wide. All investors would like to have access to certain facts about an investment before buying it and while holding it. In order to achieve this, the SEC requires all public firms and companies to disclose meaningful financial and other information to the public, to follow GAAP (SEC, 2007). Thus, any company that wishes to be a market in the SEC’s securities must register with the SEC. For those companies with foreign registrants, the SEC requires them to either report under US GAAP or to provide reconciliations to US GAAP (Nobes, p146, 2006). The SEC also requires public firms to follow GAAP in order to be audited. It is quite evident that most of American accounting is rule based, not government based. According to Nobes’ textbook, Comparative International Accounting, the commission since its inception has intended to limit the exercise of its accounting standard-setting authority to a supervisory role, permitting and encouraging the private sector, currently

In this report I will be describing how legislation and accounting concepts, could affect a business company’s accounting policies. I will also be talking what Acts contain, concepts and their importance, and also accounting policies. I will be supporting my work with examples.

Regulation is defined as a set of rules that is designed to control and govern conduct by authority (Deegan 2009, p.59). On the basis of this definition, Deegan (2009, p.59) has defined regulations relating to financial accounting as rules that are developed by independent authoritative body to govern the preparation of financial statements which are accounting standards. Since decades ago, there have been arguments for and against the existence of accounting regulations. With a stance of pro-regulation, this essay is going to examine the reasons that financial accounting and reporting should be regulated and the merits of accounting regulations.

In general, the importance of accounting regulations resides in its ability to provide standards. The latters are necessary in determining whether a company is reporting its activities or not to the shareholders. Accounting regulations also protect the mean interest of the external and internal users. Information is prepared according to specific guidelines.

Regulation is a topic that has been debated for many years and will continue to be debated for years to come. In the business and finance sector, there are many regulators including but not limited to the Australian Securities and Investment Commission (ASIC), Financial Reporting Council (FRC), Australian Prudential Regulation Authority (APRA) and the Australian Accounting Standards Board (AASB). While these are only a few regulatory bodies in the industry, they all have their own set of regulations to enforce. ASIC, for example, regulate the Corporations Act 2001 along with the Australian Accounting Standards. While ASIC ensure that organisations adhere to the regulations laid out before them, the AASB create and develop those

Financial regulation is necessary and without an efficient set of regulations a country could see rises in unemployment, interest rates, and the deterioration of financial intermediaries. With the globalization of the financial industry, it becomes more and more common for businesses to seek financing outside of their county 's boarders. These innovations in the financial industry stress why it is so important for regulations to be created and changed to reduce risk and asymmetric information in financial systems.

The first paper is a very interesting approach to EVA and to accounting practices. It sheds light on the issue that accounting is not what is used to be and cannot account anymore for what it has to account. Accounting standards lack the ability to control and guide executive behavior.

The theory of economic regulation developed from the nineteenth century and the literature is now vast (for recent reviews, see Laffont and Tirole, 1993, 2000; Levy and Spiller, 1994; Newbery, 1999). The case for economic regulation is premised on the existence of

The important reasons which necessitate harmonization of accounting practices are well contained in the observation made by Saudagaran. “While the initial efforts at harmonization were mainly championed by political bodies and professional accounting organizations, current pressures to harmonize are driven by investor groups who use financial statements, multinational companies which prepare financial statements, regulators who monitor capital markets, the securities industry (including stock exchanges) which view itself as being significantly impacted by the global diversity in financial reporting requirement, and developing

Despite the controversies in the practice of accounting profession, in-roads were made towards strengthening the regulation of financial reporting