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- Date Submitted: 12/09/2011 01:37 PM
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Generally Accepted Accounting Standards Paper
The success of a company relies on more than attractive numbers, the constant evaluation, and tests of transactions. The data provided in the financial statements is important to many people. The internal and external users share a common interest to show the financial stability of a company. Public entities are expected to do the right thing, which means the public holds organizations accountable. The individuals who can measure rely heavily on accurate financial statements are: potential investors, taxpayers, creditors, public attention, products and services.
Deception brings a loss of confidence, which can create a “butterfly effect” that ends in a negative impact on the bottom line.
Public sector principal-agent conflicts may arise in several instances. A primary conflict may arise between the goals of the department/bureau head and the goals of the resource providers' representative during the budget process. The goals of the bureaucrat may be to maximize the bureau's operating budget in order to consume perquisites or due to an altruistic belief in the importance of the bureau's mission. The elected official is often concerned with public accountability at election time for the funding and operation of multiple bureaus (Sinason, 2000, p. 3).
Enron and WorldCom have given public trading organizations trouble with trust. Sarbanes-Oxley Act is created to help ensure and return investor and consumer confidence. For auditing purposes documents are to be held for seven years; president of the California Board of Accountancy, Navid Sharafatian, Esq states:
State Boards such as the California Board of Accountancy continue to be the only regulatory entities that can issue individual or firm certified public accounting licenses, or revoke those license [sic] because of actions resulting in consumer harm; additionally state boards will continue the very important role of overseeing auditors of privately-held...
The success of a company relies on more than attractive numbers, the constant evaluation, and tests of transactions. The data provided in the financial statements is important to many people. The internal and external users share a common interest to show the financial stability of a company. Public entities are expected to do the right thing, which means the public holds organizations accountable. The individuals who can measure rely heavily on accurate financial statements are: potential investors, taxpayers, creditors, public attention, products and services.
Deception brings a loss of confidence, which can create a “butterfly effect” that ends in a negative impact on the bottom line.
Public sector principal-agent conflicts may arise in several instances. A primary conflict may arise between the goals of the department/bureau head and the goals of the resource providers' representative during the budget process. The goals of the bureaucrat may be to maximize the bureau's operating budget in order to consume perquisites or due to an altruistic belief in the importance of the bureau's mission. The elected official is often concerned with public accountability at election time for the funding and operation of multiple bureaus (Sinason, 2000, p. 3).
Enron and WorldCom have given public trading organizations trouble with trust. Sarbanes-Oxley Act is created to help ensure and return investor and consumer confidence. For auditing purposes documents are to be held for seven years; president of the California Board of Accountancy, Navid Sharafatian, Esq states:
State Boards such as the California Board of Accountancy continue to be the only regulatory entities that can issue individual or firm certified public accounting licenses, or revoke those license [sic] because of actions resulting in consumer harm; additionally state boards will continue the very important role of overseeing auditors of privately-held...