Financial Accounting And Reporting Standards - 1426 Words

Financial Accounting and Reporting Standards Jeremy J Boston Saint Leo University Abstract Financial accounting has become more complex as our country grows. The United States has established a core financial body to ensure all financial statements are published within the prescribed guidelines so that any creditor or investor is able to read and understand the information. The FASB was created to ensure that these guidelines are followed and they are well-paid individuals so there is little chance of them keeping ties with their private firms which creates a trust with the public. The FASB crated a conceptual framework that all companies must adhere to. This ensures that investors, creditors and the public receive an honest†¦show more content†¦Financial Statements and Financial Reporting Challenges Along with the demand for a more universal form of accounting report come many challenges. Many of them are in the form of the Sarbanes-Oxley Act. Scandals within the accounting departments in companies such as Enron, Rite Aid, and Xerox caused this act to be created. The Sarbanes-Oxley Act created the Securities and Exchange Commission, SEC, which helped standardize all financial information that was passed along to the stockholders. Auditors were affected as a part of the act in the sense that they became more independent and strong. The audit committee’s became independent members with prior financial expertise. They were however limited to no more than a 5-year partner rotation within their respective firms. CEO’s and CFO’s were also to be help more accountable for their financial reporting. CEO’s and CFO’s are now required to personally sign off and certify financial statements. If there is a mistake they forfeit their entire bonus. Within eac h organization there is also requires being an internal checks and balances process to prevent and detect possible fraud. Most of all, there the Sarbanes-Oxley Act establishes a code of ethics for all senior financial officers. This act is to ensure that public trust is maintained at all times. Objectives According to Keiso, Weygandt, and Warfield (2013), Financial reporting’s goal is to â€Å"provide financial information about