Research Paper – Understanding Standard and Rule Setting in the Accounting Industry (SSAI) – Phase 2

The assignment this week will be the second short paper on Standard Setting Industry Project with a focus on the role of the U.S. Securities and Exchange Commission (SEC) and it oversight responsibilities as a relationship to the Public Company Accounting Oversight Board (PCAOB), the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act.

Please use Presentation Format. NOT ACADEMIC.

You have to start WITH (( I work in the accounting department of Pennypacker and Vandelay, LLC as a healthcare manager )) YOU HAVE TO TALK MORE ABOUT YOURSELF IN THIS INTRODUCTION.

I attached chapter 5-6. Please read it. Also, READ CHAPTER 4.

2-3 pages of content pages including three research references.

Our first work

The management of Happy Hospital, it is my pleasure to present to you an interesting topic about Standard Setting in the Accounting Industry. I work at Pennypacker and Vanelay, LLC in the accounting department as a healthcare manager. Accounting has been referred to as the language of any business because in every area of management of an organization there involves exchanges of terms like journal entries, receivables, payables and ledgers among others. According to Finkler et al. (2019), there is an essence of every organization to maintain set accounting standards and principles so as to prepare correct financial statements provided to other users. Although it depends on the choice of an organization, there are general accounting principles and standards that are used to guide the management and maintenance of accounts.

The general principles and standards of accounting were set to provide some uniformness in the accounting information presented by organizations. Before the setting of the standards and principles, organizations used to prepare financial statements in their own way hence becoming difficult to compare their performance. It is due to lack of formalities, set standards and principles that the Great Depression manifested opening doors for fraudulence. As a result of this Great Depression the federal government saw the need for regulating the performance of financial markets. For the purposes of this study, I consider two Acts that were passed by the Congress in order to control incidences of fraud by regulating the financial activities.

The Congress enacted the Securities Exchange Act of 1934 for the purposes of ensuring that investors, either in private or public sectors, follow the Generally Accepted Accounting Principles. The Securities Act of 1933 had been promulgated to ensure that the financial entities report the sales and distribution of their stock as well as reporting their current financial status and financial status. The Securities Exchange Commission (SEC) is an organization mandated to set and control the accounting standards for companies who undertake the exchange of securities publicly. The SEC was developed after the Great Depression having been composed of two subsets of organizations. The Financial Accounting Standards Board (FASB) is an organization formed under SEC. It is a not for profit private body that helped in the setting of the GAAP. FASB ensured that the formed GAAP were in accordance with the public?s interest.

The American Institute of Certified Public Accountants (AICPA) is another organization under SEC operating to regulate the financial performance of organizations in the financial market. This body is comprised of public accountants who perform their duties guided by the Certified Public Accountants (CPAs) in setting accounting performance standards and principles to guide in the conduct of business aspects worldwide, articulates Needles et al. (2013). The AICPA sets principles and standards to be followed by other accountants in organizations while carrying out the accounting duties. The penalties and sanctions that can be imposed on an accountant due to failure in observing the set principles and standards while performing their duties are also stated. The two bodies hence work together to ensure success in their performance while the SEC oversees these bodies? performance as well as enforcing the rules that they set, asserts Donelson et al. (2012).

References

Donelson, D. C., McInnis, J. M., & Mergenthaler, R. D. (2012). Rules-based accounting standards and litigation. The Accounting Review, 87(4), 1247-1279.

Finkler, S. A., Calabrese, T. D., & Ward, D. M. (2019). Accounting fundamentals for health care management. Burlington, MA: Jones & Bartlett Learning

Needles, B. E., Powers, M., & Crosson, S. V. (2013). Principles of accounting. Cengage Learning.