About 'fasb accounting'|Lease Accounting: FASB/IASB Project Update - Monitordaily
Should the government be more involved in controlling irresponsible behavior of companies? "The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation." In 1933 Congress passed the securities act of 1933. In 1934 the Securities Exchange Act was formed. Together these created the SEC. There was a need for intervention because after the Great Depression investors needed their confidence in the market restored. The SEC protects the investor by providing the public with information and rules of how companies should behave (SEC.gov, 2009). There are other government agencies, such as the FASB, which established the generally accepted accounting principles (GAAP). GAAP is a set of rules that companies need to follow to report their financials. Managers who do not follow GAAP guidelines are subject to fines and possibly imprisonment (Investopedia, 2009). It was clear after the situations that happened at Enron, WorldCom and Arthur Anderson that the government needed to get involved again. This led to the Sarbanes-Oxley Act (SOX) of 2002 (Jones, 2007). The main goal of the Sarbanes Oxley Act was to correct the financial standards of corporations. Companies need to submit their annual reports to the SEC. They need to explain the internal accounting controls. CEO's and CFO's need to certify in writing that the company's financial statements comply with the law and accurately represent the company's financial situation. If the officers of the companies violate the Sarbanes Oxley Act they can be faced with substantial fines and imprisonment. The act also protects whistle blowers, and prevents the individuals who would face fraud charges from filing bankruptcy in order to hide their assets (Atkins, 2002). Now we need to answer the question as to whether or not the government should be more involved in controlling irresponsible behavior. In my opinion I feel that this is not necessary. The added costs that companies have had to endure to become compliant with SOX such as legal fees has discouraged companies from going public. Also some companies are delisting their shares. Some companies have had to hire new employees because SOX requires a segregation of duties (Daks, 2006). The policies that the government has in place are effective as long as companies follow the rules. There are a few companies that are going to violate the rules, but most of them are going to abide by the laws that are currently in place. References: Atkins, P. S. (n.d.). U.S. Securities and Exchange Commission [Speech by SEC Commissioner: The Sarbanes-Oxley Act of 2002: Goals, Content, and Status of Implementation]. Retrieved April 18, 2009, from http://www.sec.gov/news/speech/spch032503psa.htm Daks, M. C. (2006, August 3). Companies 'Go Dark' to Avoid SOX Compliance.New Jersey Law Journal. Retrieved April 18, 2009, from Law.com database: http://www.law.com/jsp/ihc/ PubArticleIHC.jsp?id=1154509535896 Investopedia [Financial Accounting Standards Board - FASB]. (n.d.). Retrieved April 18, 2009, from http://www.investopedia.com/terms/f/fasb.asp Jones, C. (2007) Investments (10th ed) Hoboken, N. J. John Wiley & Sons Inc.U.S. Securities and Exchange Commission [The Investor's Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation]. (n.d.). Retrieved April 18, 2009, from http://www.sec.gov/about/whatwedo.shtml |
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