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AICPA. The biggest professional association for Certified Public Accountants in the United States with over 300,000 members, the AICPA (the American Institute of Certified Public Accountants) was founded in 1887 to provide its members with information resources that will facilitate the practice of the accounting profession in the premier professional conduct for the advantage of the general public.

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It develops technical standards for audit and other educational materials to its members such as latest developments to the accounting field, products and services of the profession, pronouncements and changes to regulatory guidelines and framework and other professional development resources. (Feller, A. et al, 1998) AICPA also has a Code of Professional Conduct that direct members in the execution of their professional responsibilities within the ethical tenets independence, integrity and objectivity to ensure upright behavior, even at the expense of personal gain.

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SEC. The Securities and Exchange Commission was established to regulate the stock market to prevent corporate abuses and balance the interests of farmers, business and labor in consideration of the market instability that triggered the economic slump.  (Lamden, C. 1978) By setting an agency that will oversee and regulate the US security markets, government can protect investors by maintaining fairness, discipline and efficiency of markets to assist creation of capital for business.  All forms of businesses including corporations and partnerships are required to be registered to SEC.

Moreover, extensive disclosures of companies whose stocks are traded publicly must be prepared for transparency and availability to public investors. They are subjected to periodical SEC regulatory review which includes information about salaries, transactions of the board, future developments and financial status.  The SEC has statutory authority to establish financial accounting and reporting standards for publicly held companies such as: the Securities Act of 1933 which oblige companies to give investors financial and other important information about securities for public sale and proscribe deceitful and fraudulent representation of the same;

  Securities Exchange Act of 1934 which expands the clout of SEC over the stocks investment industry including brokerage firms and clearing agencies; Investment Company Act of 1940 which control the organization of firm mainly involved in securities trading; Investment Advisers Act of 1940 which controls investment advisers; and the Sarbanes-Oxley Act of 2002 which provided reforms to boost corporate responsibility, improve financial reporting and documentation and fight corporate crimes

 PCAOB. The Public Company Accounting Oversight Board is a private non-profit corporation that supervises the auditors of publicly traded companies to ensure implementation of the Sarbanes-Oxley Act of 2002. (Greene, E. 2004)  The Sarbanes-Oxley Act of 2002 or SOX is administered by the SEC to further protect investors from accounting errors and fraudulent corporate practices by identifying historical company records including electronic records that is required to be kept for a period of time i.e. 5 years.

The act included the proscription for intentional destruction, fabrication and distortion of records which included workpapers, audits, and correspondence among others.  PCAOB also functions to establish auditing guidelines/ standards in report preparation such as the use of references in Auditors’ Reports in which rulemaking docket applies in the proposal and adoption of releases, preparation of public comments or board statements; proper audit documentation of the written record or working papers that provided the basis for the auditor’s conclusions; reporting on material that are identified as weak; and integration of audited financial statements with an audit internal control, among others.

FASB. The Financial Accounting Standards Board is an independent organization that represents the private sector in the establishment of financial accounting and reporting standards along with the Financial Accounting Standards Advisory Council (FASAC), Financial Accounting Foundation (FAF) and Governmental Accounting Standards Board (GASB).

This set of standards commonly known as the Generally accepted accounting principles or GAAP is the primary basis of financial accounting that reflect the reporting guidelines for financial accounting and federal government financial standards.  Such standards are an important aspect of accounting to ensure efficiency of economic operations because all entities that have a stake in the economy including consumers, investors and creditors generally depend on authenticity, truthfulness, transparency and comparativeness of accounting information.

 Conclusion

While these accounting regulating bodies indeed help in curbing corporate abuses, ethics in business is something that cannot be imposed through policies but something that must be preached. Businesses in connivance with accountants and government personnel can always find ways to circumvent policies and laws.  Corruption is cultural in nature. (Hauk, E and Sáez-Martí, M., 2001) Its embedment cannot be changed by mere policies and penalties.

The prevention of corporate abuses entails companies themselves to adopt stricter policies to prevent them such as the creation of independent committees in the board that augment check and balance of financial reports.  On the other hand, the federal government can intensify its effort on preventing corporate abuses by toughening criminal liabilities and sanctions i.e. reclusion perpetua or even death penalty, banning corporate offenders from government contracts, making some businesses illegal like war profiteering and enhancing the Foreign Corrupt Practices Act, among others.  

 REFERENCES

Feller, A. Ziebart, D. Molloy, K and Omer, T. (1998). An Introduction to Applied Professional Research for Accountants. Prentice Hall

Greene, E. (2004). .S. Regulation of the International Securities and Derivatives Markets.
Aspen Publishers Online

Hauk, E and Sáez-Martí, M., (2001) On the Cultural Transmission of Corruption. IUI, Research Institute of Industrial Economics”

Lamden, C. (1978). The Securities and Exchange Commission. Arno Press

www.fasb.org

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