Question

Assignment Details

This assignment has 3 parts:

How do accounting policies and practices affect financial accounting information used for "external" decision making purposes?

What governing and oversight bodies exist to help ensure timely and accurate reporting of financial information by publicly traded companies?

How to internal controls help ensure that financial results are accurately and fairly presented for use by external users?

Answer 1

Part 1. Financial accounting information used for "external" decision making purposes.

Investors and lendors rely on financial accounting to obtain the critical information about the company's financial health, viability and risks associated with it. Proper accounting policies and practises provide the correct financial accounting information to the investors and lenders, they does not have ongoing inside access to day to day operation of the company, they rely on financial accounting information to provide accurate and readily comparable information. Financial accounting allows the investors and lenders to observe the profitability and value of the company.

Part 2.

Financial reporting is regulated by governing bodies such as securities exchange commission (SEC), financial accounting standards board (FASB), International Accounting Standards Board (IASB) and Generally accepted accounting principles (GAAP).

Part 3. Internal controls

Internal controls apply standards within the business to ensure all the transaction are properly recorded in compliance with laws and regulations, their is no misstatement in financial accounting information, the business assets are safeguarded and the financial results are accurately and fairly presented for use by internal and external users.