Accounting Governing Bodies Within U.S.

The extent to which each organization affects reporting entities depends in great part on the jurisdiction of each governing organization.

The SEC, as an example, is concerned with the protection of investors and other users of financial information. Thus, the focus of the SEC is on financial reporting the accurately reflects the financial position of a publicly-traded company as a going concern, the future prospects of the company, and the public disclosure of information that may affect with of these factors. The SEC develops accounting regulations designed to assure that the financial reports of publicly-traded companies satisfy these objectives. The IRS, however, focuses in the federal income tax liability of taxable entities. The IRS develops accounting regulations the intention of which is to assure that federal income tax liability for specific periods is correctly determined. It is possible that a company that prepared financial reports based only on SEC accounting regulations or only on IRS accounting regulations would risk failure to comply with the accounting regulations of the other governing body. Thus, the financial reports of publicly traded companies must be prepared in a way that satisfies the accounting regulations of both the SEC and the IRS.

The AICPA develops generally accepted accounting practices (GAAP) that govern the practice of public accounting in the United States. The GAAP tend to deal with issues that are related to SEC, IRS, FASB, and GASB accounting regulations. GAAP, however, neither supersede nor override SEC or IRS accounting regulations and rulings. It is important to remember that SEC and IRS accounting regulations and rulings have the force of law behind them, which is not true of the accounting regulations promulgated by the other accounting governing bodies discussed in this research. The GAAP define the professional practice guidelines for certified public accountants in the United States.

This research examined the role of six governmental, professional, and international organizations that affect the accounting practices of firms operating within the United States. The effects of the financial accounting standards promulgated by these six organizations on residential mortgage service companies operating within the United States also were considered.

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