Essay on History of Auditing

After the crash, many business failed, banks closed, and because of that, lots of workers were out of job. Homes and farms had been lost to foreclosure. In 1933, the government finally decided to do something, congress passed the Securities Act of 1933, which required companies that sold stocks and other securities to communicate important information to consumers and set up systems to prevent fraud. The law was strengthened in 1934 when congress created the Securities and Exchange commission (“Black Tuesday”). Herbert Hoover, the president of US during this event, thought the stock market would get better within 60 days (Stock). The crash also helped lead to the onset of the Great Depression by undermining confidence in the economy, but it

The Auditor, an instructional novella written by James K. Loebbecke, tells the story of Jack Butler, a man from the San Francisco Bay area, who goes to college, majors in accounting, and goes to work for a large accounting firm referred to as “The Firm.” The story is loosely based upon the real world experiences of the author, and is written to give students a look into the world of public accounting that goes beyond a textbook. The Auditor not only gives students a chance to follow Jack Butler’s journey up the company ladder at The Firm, but also reiterates the relative importance of conventional lessons learned in school.

The SEC was created due to the stock market crash of 1929 which led to the great depression. The SEC was created to protect investors in security exchanges such as the stock market. It is responsible for oversight of both private investment and corporate investment dealings.

The audit report in the 1920’s was very basic. The audit report was titled the “Certificate of Auditors” and said that the auditors had examined only the balance sheet accounts and these accounts were in line with the explanations and information given to the auditors. It then said that the statement presented a true and correct view of the financial condition of the company. This is very different from the audit report used today. Today, the audit report is much more detailed to help auditors avoid liability. Instead of simply examining the

The Securities Act of 1933 regulated the securities and the accounting standards before the Sarbanes Oxley Act was passed. Under the Securities Act, corporations and their investments bank were legally responsible for telling the truth and making sure the financial statements were audited correctly. Although corporations were responsible, the CEOs were not which was meant it was hard to prosecute them for fraud. The Sarbanes-Oxley Act was enacted in response to a series of high profile financial scandals that occurred in the early 2000s at companies including Enron, WorldCom, and Tyco that rattled investor confidence. The Sarbanes Oxley Act was named after

The Securities Act of 1933 was enacted as a result of the market crash of 1929 (). It was the first major piece of federal legislation to apply to the sale of securities. The legislation was enacted as the need for more information within and about the securities markets was acknowledged. Prior to 1933, regulation

ASC 410-20-25-8 indicates that an asset retirement obligation is estimable if all of the following exist:

With troubling incidents like the stock market crash of 1929, reform was highly necessary to never have a relapse of these events in the future. Historian Allan Nevins says that the New Deal was the epiphany the government needed to possess greater responsibility for the economic welfare of its citizens. It made the government initiate attempts to reorganize the economic turmoil and restore the people’s faith in banking system which was successful with the Emergency Banking Relief Act and Bank Holiday. Congress allotted for the Treasury Department to weed out the unfit banks and reopen the stable banks, significantly lowering bank failures. Especially with measures like the Glass-Steagall Act it offered assurance and insurance to citizens with a compensation of 5,000 dollars in the case of an inconvenience of their bank and since the creation of the FDIC there were no incidents in which a depositor has lost its insured funds. Many of the legislations passed under the Reform point remained for fifty years to prove the reliability and effectiveness like the Securities and Exchange Commission that regulated stock market activities and prevented another large scale crash to occur, keeping the economy at bay. And the Social Security Act of 1935 to reinforce the sensation of

The banking industry as a whole after the stock market crashed was going bankrupt due to not being able to carry the “bad debt” that was created from using customer money to buy stock. Because the banks were out of money, they were unable to cover customer withdrawals from their bank, causing many bank customers to lose all of their savings. With the uncertainty of the future of the banking industry, many people withdrew all of their savings, which caused more than 9,000 banks to close their doors and go out of business (Kelly). Due to the effects of the Great Depression, and the collapse of the banking industry, the government created regulations to prevent similar failure in the future. For Example, the SEC, (or Securities Exchange Commission), which regulates the sell and trade of stocks, bonds and other investments was created as a result of The Great Depression. The FDIC (or Federal Deposit Insurance Corporation), was created to insure bank accounts so that that the consumer would be protected if the bank were to go out of business (Kelly). The Great Depression's effect on the banking industry led to many useful changes to the banking industry and helped restore confidence in banks in the American people.

In 2008, the housing market crashed and America fell into a recession. Many Americans lost their homes. Many investors lost large sums of money, and overall the economic recession hurt America as a whole. Today, we see that the stock market is more regulated than it was in 1929 with the Great Depression and 2008 with the Great Recession, but it is still not regulated as much as it previously was. In 1999, portions of the Banking Act of 1933, more commonly known as the the Glass-Stegall Act, were repealed. The repeal of the Glass-Stegall Act in 1999 sparked the Housing Crisis of 2005 and ultimately led to the Great Recession that America experienced in the 2000’s.

For instance, the funds owed the company by the Rigas family went undisclosed in the statements, because the management at Adelphia deemed such disclosure as being “unnecessary” (Barlaup, Hanne, & Stuart, 2009). Given that Adelphia was a publicly traded company, the purposeful non-disclosure caused potential investors to rely on financial records that were grossly misleading. The inevitable result was the investors continued to inject money into a company that had all the appearances of profitability and sustained growth, but that was, in reality, rapidly becoming insolvent. Moreover, lending institutions also relied on the “independently-audited” financial statements, and they were more than eager to loan the company money, given Adelphia’s presumed state of financial “profitability.”

If some research is undertaken that provides evidence that capital markets do not always behave in accordance with the Efficient Market Hypothesis, does this invalidate research that adopts an assumption that capital markets are efficient?

The accounting system we use today started in Venice in renaissance period over 520 years ago. The trade business increased hugely during this time and all the financial recordings had to be written down to help people see how their business is doing. During that time in 1494 the first book about was published in accounting by Luca Paciolli and was called “The Collected Knowledge of Arithmetic, Geometry, Proportion and Proportionality”. He was called “The father of Accounting” and most of his described principles have been used up until this day.

MC Wells ‘A Revolution in Accounting Thought’. The Accounting Review. V.LI. No.3. July 1976. pp471-82. The article does not have an abstract – write an abstract of no more than 400 words. A short guide to writing an abstract is provided. ----Answered by Wenxin

Accounting can be defined in a number of ways, but I chose the book definition, which is; Accounting is an information system that provides reports to stakeholders about the economic activities and condition of business. The person in charge of accounting is called the accountant. The accountant is typically required to follow a set of rules and regulations. These rules and regulations are called the General Accepted Accounting Principles. Throughout these next few paragraphs, I will be giving you the history and evolution of accounting, and I will be explaining who the stakeholders are and what type of information they require, and I will be explaining the role of accounting in business. There will be many examples and type of business