United States Securities and Exchange Commission - Essay Example

Although it might be simple to assume that the United s Securities and Exchange Commission (SEC) operates as a singular entity, the fact of thematter is that it is broken down into a litany of different offices and boards that allow for each of the given functions that this particular entity is responsible for to be accomplished. In seeking to understand the means by which the SEC has been able to impact upon the progression of understanding with regards to the progress that the SEC has been able to make with respect to the level of integration that universal financial accounting standards have been able to enjoy within the current world (Palmon et al. 167). As a means of answering this question, it is necessary to look at the progress that the Financial Accounting Standards Board and review how this has developed into the codification of best practices and expectations that it represents in the current era.

Through such an analysis is the hope of this author that the reader will gain a more informed understanding with regards the way in which the Securities and Exchange Commission is able to impact upon counting within the current world and provide a level of codification and standardized nation that is almost universally accepted as a best practice throughout the business world. The first step towards a level of universality was with respect to the integration of accounting standards into the individual professional accounting boards throughout the United States.

These included but were not limited to the following: the American Accounting Association, The American Institute of Certified Public Accountants, CFA Institute, Financial Executives International, Government Finance Officers Association, Institute of Management Accounts, National Association of State Auditors, Comptrollers and Treasurers, and Security Industry Association. By integrating with each of these entities, the SEC was able to foster a level of appreciation and applicable use for the universality of the accounting standards that they sought to promote throughout the system (Kaya et al. 273). Naturally, even though this was one of the first steps which was undertaken, it has continued to be a useful means through which the SEC is able to integrate potential stakeholders with the limits of accounting and the best practices that they deem suitable for use within the system.

A further method by which this standardization was able to be effected was by the creation and implementation of codification. The FASB announced that the Accounting Standards and Codification arm of the entity would be responsible for seeking to set out a legal framework within which the process of accounting could more efficiently be delineated. Although this is not a novel approach, it did help to clarify many “grey” areas that had previously existed with respect to the process of accounting (Cheney 9).

Another important development that took place with regards to the way in which the SEC determines and seeks to define accounting practices within the system is with respect to the delineation of mandatory meanings with regards to the following terms: predictive value, confirmatory value, materiality, and a litany of others (Poon 308). Moreover, the Norwalk Agreement was instrumental in helping to further define the mechanisms through which the FASB is able to provide a level of convergence between the different financial and reporting standards that are exhibited throughout the system.

Ultimately, the preceding information only helps to provide the reader with a very rough level of understanding with regards to the mechanisms through which the SEC has been able to delineate something of a universal approach to accounting throughout the system. In fact, this universality has greatly helped to reduce the overall level of confusion that exists amongst accountants when it comes to deciding to the value or count a given asset or liability within a given way. However, it must be understood that even though a great level of delineation has been provided by the SEC, unethical accounting practices and approaches nonetheless exist and are oftentimes utilized within the system.

The ultimate differential that exists between now and several decades previously is the fact that the level of confusion and/or plausible deniability with regards to a lack of knowledge concerning the parameters of the law has been effected through the proper implementation of universal standards and accounting that can be applied within each of these specific ways that have thus far been analyzed. In short, the individual account is now faced with a situation through which not only the federal laws that oversee accounting standards, but also the individual accounting agencies and professional boards also provide the same level of universality so that fewer mistakes can be innocently made within the process.

Works Cited Cheney, Glenn Alan. "SEC Approves Audit Communication Standard." Financial Executive 29.2 (2013): 9. Business Source Complete. Web. 21 Oct. 2013. Kaya, Devrimi, and Julian A. Pillhofer. "Potential Adoption Of IFRS By The United States: A Critical View." Accounting Horizons27.2 (2013): 271-299. Business Source Complete. Web. 21 Oct. 2013. Palmon, Dan, Marietta Peytcheva, and Ari Yezegel. "The Accounting Standards Setting Process In The U.S.: Examination Of The SEC-FASB Relationship.

" Group Decision & Negotiation 20.2 (2011): 165-183. Business Source Complete. Web. 21 Oct. 2013. Poon, Wing W. "Incorporating IFRS Into The U.S. Financial Reporting System." Journal Of Business & Economics Research 10.5 (2012): 303-311. Business Source Complete. Web. 21 Oct. 2013.