| To make sure that financial statements are easy | | | | set and execute accounting practices for |
| to understand, there is a set of rules and | | | | companies that sell security to the public, and it |
| practices that is established, which is known as | | | | has a large impact on accounting practice. Next, |
| the generally accepted accounting principles | | | | the governmental accounting standard (GASB) is |
| (GAAP). This has been developed to provide a | | | | critical for accounting because its main job is to |
| basic guideline for the rules of accounting because | | | | issue the standards for accounting to the local and |
| I think it’s fair to say that it can get | | | | state governments in the United States. |
| confusing at times. There are a lot of variations | | | | However, a lot of these organizations are focused |
| to the meaning so here is the best answer. | | | | on the rules in regulations in the United States. |
| It’s the generally accepted accounting rules | | | | |
| and procedures that are necessary to define | | | | There are a lot of businesses and accountants |
| accounting practice. | | | | internationally so that’s why the |
| | | | | International Accounting Standard Board (IASB) |
| Basically it’s a set of theories that | | | | was formed. It was approved by more then 25 |
| accountants come to accept, and there are | | | | international agencies. The U.S laws that analyze |
| always controversies with some methods | | | | the revenues for the cost of operating a business |
| between accountants like any other field of study. | | | | can also affect accounting practice. It’s no |
| Accounting is a discipline that is always growing | | | | question that the major provider for income for |
| and changing so it’s a good idea to keep | | | | the government comes from income tax. The |
| up to date with all of the trends that are going on. | | | | income tax rules are heavily applies by the |
| Since the management prepares the financial | | | | Internal Revenue Service (IRS). Sometimes these |
| statements of a company it is possible that a | | | | rules actually cause a conflict with the accepted |
| financial statement can be altered to give a | | | | rules of accounting. A lot of businesses use |
| company a particular boost. So, that’s why | | | | accounting practices because it’s a |
| the companies that sell their ownership to the | | | | requirement by tax law. Also, companies can |
| public needs to get their financial statements | | | | use the rules of tax law to their advantage |
| audited by a public certified accountant. A certified | | | | financially. Accounting also has laws of conduct |
| public accountant (CPA) are licensed through the | | | | for profession, and one extremely important one |
| sate for the same exact reason lawyers and | | | | is ethics. A nice website dealing with the issues of |
| doctors are, so they and protect the public by | | | | ethics is ethics.org. |
| providing the highest quality of professional | | | | |
| service possible. The reason why CPAs are used | | | | It touches bases on questions that help determine |
| is because they have no connection with the | | | | if something is either right or wrong, and is based |
| company and are independent. They have zero | | | | on moral decisions. Most people are faced with |
| financing ties with the company. | | | | several ethical issues each day and, and some |
| | | | | ethical activities could be on the range of illegal. If |
| Some firms that employ a lot of certified public | | | | a business decides to use false or misleading |
| accountants include Deloitte & Touch, KPMG, and | | | | advertising, or to bribe customers into giving them |
| PricewaterhouseCoopers. An accountant with no | | | | testimonials for a specific product, then they could |
| strings attached or is independent commonly | | | | be acting in an unethical manner. The ethics of a |
| performs an audit, which is evaluating a | | | | company could also be a result of the employees |
| companies financial statements, product, | | | | so that’s why it’s always a good |
| accounting systems, and records. The main | | | | idea to run a background check of who you are |
| purpose of an audit is to make sure that the | | | | hiring, whether it’s online or offline. |
| financial statements have been properly prepared | | | | |
| according to the excepted accounting rules. Keep | | | | Professional ethics is the guidelines that apply to |
| in mind; since accounting is not a precise science it | | | | the conduct of individuals of a certain profession. |
| has room for interpretation according to the | | | | Similar to the ethical actions of a company, the |
| GAPP. However, that doesn’t mean that | | | | ethical actions of an individual is a decision. As |
| the accountants report should contain substantial | | | | being a member of an organization, accountants |
| errors in the financial report, but more like that | | | | have to take the responsibility not only to their |
| for the most report it is reliable for creditors to | | | | customers and employers, but also to the general |
| take a look at. An accountant can make a | | | | public to act in the greatest ethical way possible. |
| decision only when the financial statements | | | | Accountants are very good at following |
| conform to the guidelines of GAAP. In the past | | | | professional ethics because they are the second |
| creditors, banks, and investors tend to favor an | | | | professional group as having the largest ethical |
| auditor when they are deciding to invest in a | | | | standards, with clergy being the highest, no |
| company or give loans, because of their | | | | surprises about that one. It is important for |
| independence. The individualistic audit is an | | | | individuals who decide to become an accountant |
| extremely crucial factor in the growth of financial | | | | to have the highest levels of professionalism as |
| markets internationally. | | | | possible. To enforce that its prestigious members |
| | | | | are following the rules, the AICPA along with each |
| Also, many organizations can directly or indirectly | | | | state have adopted some codes of professional |
| influence a GAAP. The Financial Accounting | | | | conduct that certified public accountants have to |
| Standards Board (FASB) is the most critical body | | | | follow. |
| for the development and issuing of rules on | | | | |
| accounting practice. The website I previously listed | | | | Some simple rules are being responsible to the |
| is extremely critical and you can attend seminars | | | | people that depend on the trust of accountants, |
| online for no cost, and also stay up to date with | | | | such as creditors and investors. When working |
| the rules. This independent body issues the | | | | with people the accountant must act with |
| Statements of Financial Accounting Standards. | | | | integrity which means that they are honest, and |
| Next, the American Institute of Certified Public | | | | the individuals gain from the visit with the |
| Accountants (AICPA) is the official professional | | | | accountant. The accountant must display |
| association for certified accountants. It’s | | | | objectivity which means that they are intellectually |
| the largest CPA organization that exists in | | | | honest, and they must remain independent which |
| America and heavily influence accounting practices | | | | means that they must avoid any relationship with |
| through its senior committees. The Securities | | | | the business or individual because it will damage |
| and Exchange Commission is the agency of the | | | | the accountant’s principles. |
| federal government that legally has the power to | | | | |