Question

The Securities and Exchange Commission (SEC) has the legal authority to regulate the form and content of financial statements. However, the SEC relies on the following organizations for implementation:

Financial Accounting Standards Board (FASB). Industry Committees of the American Institute of Certified Public Accountants (AICPA.)Principles and Practices Board of the Healthcare Financial Management Association (HFMA). Should the preparation and presentation of financial accounting data be regulated?

Answer 1

Financial information is very important for any organisation as it tell us about the current financial position of the organisation. With this information any person can get to know about the financial health of the organisation and take their decision accordingly. Before investment in any organisation a person has to look after many information, out of that many important information can be get through financial statements. For e.g. an investor want to know whether that organisation is profitable or not? How much percentage of profit they are making on sales? Whether there are much debt in the books of the company? How much earnings investors are getting per share? and many more.

From the above para it is understandable that financial information plays a vital role in reaching on a conclusion whether an investor should invest in the organisation or not. Due to a big importance of financial information there is always a threat that an organisation can provide wrong financial information or manipulate the same for getting funds from the investors.

For avoid these threats there are some regulatory bodies who provides set accounting standards for the preparation and presentation of financial statements which has to be follow by all the organisations, so that a true and correct picture of financial statements can be get by the investors.

From the above points it can be concluded that preparation and presentation of financial accounting data should be regulated.