...Financial Statements ACC/280 July 23, 2011 Cary Schulz, Facilitator Financial Statements Accounting is a critical aspect of any organization; without accounting a business will not be successful. This paper will inform one of the purposes of accounting; the four basic financial statements; how the basic financial statements are interrelated; and why they are useful for managers, investors, creditors, and employees. Accounting is crucial for every business. Purpose of Accounting Accounting is the information system that records, identifies, and communicates an organization’s economic events to interested users (Weygandt, Kimmel, & Kieso, 2008). The definition of financial accounting is the field of accounting that treats money as a means of measuring an organization’s economic performance as opposed to a factor of production. This is comparable to cost accounting (Walden University, 2011). Financial accounting involves the entire system of controlling and monitoring money as it comes in and out of the organization as liabilities and assets; as well as revenues and expenses (Walden University, 2011). Financial accounting pulls together and summarizes the financial data to produce financial reports, such as a balance sheet and income statement for an organization’s investors, lenders, management, tax authorities, suppliers, and other stakeholders (Walden University, 2011). Financial accounting provides financial and economic data for creditors, investors, and...
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...SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 210, 229, 230, 240, 244 and 249 [RELEASE NOS. 33-8982; 34-58960; File No. S7-27-08] RIN 3235-AJ93 ROADMAP FOR THE POTENTIAL USE OF FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS BY U.S. ISSUERS AGENCY: ACTION: Securities and Exchange Commission. Proposed rule. SUMMARY: The Securities and Exchange Commission (“Commission”) is proposing a Roadmap for the potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board by U.S. issuers for purposes of their filings with the Commission. This Roadmap sets forth several milestones that, if achieved, could lead to the required use of IFRS by U.S. issuers in 2014 if the Commission believes it to be in the public interest and for the protection of investors. This Roadmap also includes discussion of various areas of consideration for market participants related to the eventual use of IFRS in the United States. As part of the Roadmap, the Commission is proposing amendments to various regulations, rules and forms that would permit early use of IFRS by a limited number of U.S. issuers where this would enhance the comparability of financial information to investors. Only an issuer whose industry uses IFRS as the basis of financial reporting more than any other set of standards would be eligible to elect to use IFRS, beginning with filings...
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...UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK ___________________________________________ ) SECURITIES AND EXCHANGE COMMISSION, ) 450 Fifth Street, N.W. ) Washington, D.C. 20539 ) ) Plaintiff, ) ) v. ) ) WORLDCOM, INC., ) ) Defendant. ) ___________________________________________) Civil Action No. COMPLAINT (Securities Fraud) The Securities and Exchange Commission (“the Commission”) alleges for its Complaint as follows: 1. From at least the first quarter of 2001 through the first quarter of 2002, defendant WorldCom Inc. (“WorldCom”) defrauded investors. In a scheme directed and approved by its senior management, WorldCom disguised its true operating performance by using undisclosed and improper accounting that materially overstated its income before income taxes and minority interests by approximately $3.055 billion in 2001 and $797 million during the first quarter of 2002. 2. By improperly transferring certain costs to its capital accounts, WorldCom falsely portrayed itself as a profitable business during 2001 and the first quarter of 2002. WorldCom’s transfer of its costs to its capital accounts violated the established standards of generally accepted accounting principles (“GAAP”). WorldCom’s improper transfer of certain costs to its capital accounts was not disclosed to investors in a timely fashion, and misled investors about WorldCom’s reported earnings. This improper accounting action was intended to manipulate WorldCom’s earnings in the year ending...
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...the SEC's role in managing financial governance? Do you think that businesses are more ethical after the passing of the Sarbanes Oxley Act? What examples are there to support you answer? “The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly and efficient markets and facilitate capital formation (Commission, 2013).” According to the web site, the SEC requires public companies to disclose meaningful financial and other information to the public. This allows investors to be educated and judge for themselves whether or not to purchase, sell or keep a particular security. The SEC also oversees participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. This helps them to maintain fair dealing and protect against fraud. It has an enforcement arm which brings civil enforcement actions against individuals and companies for the violation of the securities laws. This would include insider trading, accounting fraud, providing false or misleading information, etc. The Sarbanes Oxley Act augments the SEC by mandating reform to “enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud (Commission, 2013),” and it created the Public Company Accounting Oversight Board to oversee the activities of the auditing profession. Judging by the continued sanctions being brought against companies, it does not...
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...University of Waterloo Waterloo ON N2L 3G1 Philip Services Corporation (Philip) is a Canadian company with its head office in Hamilton, Ontario. Its common shares are listed on the Toronto Stock Exchange (TSE), the Montreal Exchange and from April 30, 1996 the New York Stock Exchange. In 1997 the company filed with the Securities and Exchange Commission (SEC) a registration statement and a prospectus to sell 20 million common shares. The company is engaged in the business of providing metal recovery and processing services including environmental waste management services throughout the U.S. and Canada. Philip’s business was organized into two divisions – the Metals Group and the Industrial Services Group. The Metals Group accounted for more than 60% of the company’s revenue (US$ 1.1 billion out of US$ 1.75 billion) and was in turn comprised of three divisions – copper, ferrous and aluminum processing, and recycling. The company’s primary base of operations is in the U.S. with approximately 70% of its revenue generated in the U.S. as at September 30, 1997 and over 60% of its common stock held by U.S. investors. The company is subject to a number of US shareholder class action suits and is subject to disciplinary proceedings by the Ontario Securities Commission (OSC). The class action period runs from May 21, 1997 (the date the 1996 annual report was filed with the SEC) through January 26, 1998 (the date the company announced that it would be recording two charges...
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...offices in Redwood City, New York and Los Angeles. The company is a leading on-line direct marketing company 4.4--million account members (Choi & Meek, 2011). The organization wants to expand into foreign markets and considers the Swiss Exchange to help meet its financial needs. Introduction This paper will discuss the case study of organization e-Centives Inc. In particular, it will discuss the factors that are relevant to e-Centives Inc.’s decision to raise capital and list on the Swiss Exchange’s New Market. It will also discuss why e-Centives chose not to raise public equity in the United States and their decision not to raise capital on the U. S. Stock exchange as well as the advantages and disadvantages of using the U. S Generally Accepted Accounting Principles (GAAP). Also discussed will be the requirement for e-Centives Inc. to prepare its financial statements using Swiss accounting standards as well as the reporting requirements and whether or not e-Centives met those requirements. Factors to the Swiss Exchange Many factors contributed to e-Centives Inc.’s decision to enter the Swiss Exchange instead of the U. S Stock Exchange. These factors include ease and availability of capital and investors, reputation of the exchange, and corporate profile and branding. While e-Centives has primarily focused their business in the United States, they are considering “expanding into Switzerland, the United Kingdom and Germany” (Choi & Meek, 2011, pg. 28). Due to their...
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...helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. . Wiley, Association for Public Policy Analysis and Management, John Wiley & Sons are collaborating with JSTOR to digitize, preserve and extend access to Journal of Policy Analysis and Management. http://www.jstor.org This content downloaded from 129.22.124.137 on Wed, 2 Oct 2013 10:25:50 AM All use subject to JSTOR Terms and Conditions WithConsent the of Governed: SEC'sFORMATIVE YEARS Thomas K. McCraw The Securities and Exchange Commission, established in 1934, has achieved a uniquely high reputationfor effectiveregulation. TheSEC succeededin largemeasurebecause of the initial strategy developedby its founders.Led by Joseph P. Kennedy,James M. Landis, and William0. Douglas, the SEC sought to restorepublic Abstract confidence in the capital marketsand induce regulatedintereststo help enforcepublic policy. These interestsincludedthe accounting and profession,the organizedsecuritiesexchanges,and the brokers dealersoperatingin the over-the-counter market.In each...
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...Professor Cheri Reiser 03/04/2013 Discuss how administrative agencies like the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC) take action in order to be effective in preventing high-risk gambles in securities / banking, a foundation of the economy. In the summer of 2012, JPMorgan Chase, the biggest U.S. bank, announced trading losses from investment decisions made by its Chief Investment Office (CIO) of $5.8 billion. The Securities and Exchange Commission (SEC) was provided falsified first quarter reports that concealed this massive loss. The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. Requiring public companies to disclose meaningful financial information to the public is an effective approach the SEC takes in order to assure the securities of this nation (U.S. Securities and Exchange Commission). This helps investors prevent high-risk gambles and allows them to make sound decisions when deciding on which companies to invest in. The Commodity Futures Trading Commission regulates the commodity futures and options markets. Its goals include the promotion of competitive and efficient futures markets and the protection of investors against manipulation, abusive trade practices and fraud (U.S. Securities and Exchange Commission). Both the SEC and the CFTC played a role in investigating the massive trading losses...
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...Challenges of Investigating and Prosecuting Inside Traders Following the stock market crash of 1929, former President Franklin D. Roosevelt signed into law the Securities Exchange Act of 1934. It was under this action that the SEC was created to regulate and monitor U.S. securities markets and create rules to establish a level playing field for all investors. Under The Code of Federal Regulations pertaining to and agreed upon by the SEC, rule 10b5-1 states; “…the purchase or sale of a security of any issuer, on the basis of material nonpublic information about that security or issuer, in breach of a duty of trust or confidence that is owed directly, indirectly, or derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person who is the source of the material nonpublic information”. (Corresponding Federal Regulations adopted by the SEC: Section 10b5-1) A person, who possesses nonpublic information, is considered an “insider”. Insider trading, therefore, is defined by the U.S. Securities and Exchange Commission (SEC) as, “buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security” (U.S. Securities and Exchange Commission, 2001). It is both illegal and unethical for vital information, known only by “insiders”, to be shared with investors who can then make timely, informed financial decisions ahead of other “outside”...
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...GOVERNMENT REGULATION IN THE ACCOUNTING INDUSTRY Government Regulation in the Accounting Industry Rebecca Gregory Kaplan University Outline Introduction Securities Acts of 1933 and 1934 • Brief History of the Securities Act of 1933 • Objectives of the Securities Act of 1933 • Summary of the Securities Act of 1933 • Necessity of the Securities Act of 1934 • Summary of the Securities Act of 1934 • Peat Marwick Fraud/Scandal The Foreign Corrupt Practices Act of 1977 • Brief History of the Foreign Corrupt Practices Act of 1977 • Summary of the Foreign Corrupt Practices Act of 1977 • Kellogg Brown & Root LLC Fraud/Scandal Sarbanes Oxley Act (SOX) • The Purpose of SOX • Summary of SOX • US Bank of Seattle Fraud/Scandal Conclusion Government Regulation in the Accounting Industry The Great Depression and the Crash of 1929 led the United States into the beginning of new regulations. The first of these regulations was the Securities Act of 1933, which had a goal of prohibiting deceit, misrepresentation, and fraud in the sale of securities. The abusive practices of many banks and Wall Street firms resulted in the creation of the Securities and Exchange Commission (SEC) in 1934. It was established by The Securities Act of 1934 and gave the SEC power to monitor the sale of securities in the U.S. As a result of SEC investigations in the 1970's, it was discovered that many businesses were making payments to foreign officials for the purpose of obtaining or...
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...Financial Statement Differentiation Sha'ron Burton ACC/561 April 3, 2012 Greg MacNaughton Financial Statement Differentiation When putting together a balance sheet, retained earnings, income statement, and cash flow statement one has just created a financial statement. These four documents together give everyone involved in a business an accurate and solid outlook on the business. This statement gives creditors, investors, and management a good look at what they are getting in to. It is essential that all four pieces are included in the statement, or it will not be accurate. They depend on one another. This paper will look at what financial statements are of interest to management, creditors, and investors. Balance Sheet Investors and management would be interested in a balance sheet. According to "Businessdictionary.com" (2012), " A balance sheet states what assets the entity owns, how it paid for them, what it owes (it’s liabilities), and what is the amount left after satisfying the liabilities” (Balance Sheet). It also includes a company’s assets, and shareholders’ equity. A company can evaluate these items and gauge what the company owes and owns. The equation for the balance sheet is assets = liabilities + shareholders’ equity. The balance sheet is a long-term view of how the company is doing. Retained Earnings Retained earnings is comes into play after the income statement, it should be done before the balance sheet. It covers...
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...Government Regulations Introduce three governmental regulations that have assisted in the checks and balances of government trading. A. Introduce the three government regulations covering the Securities Acts of 1933 and 1934, The Foreign Corrupt Practices of Act of 1977 and finally Sarbanes-Oxley Act. B. Origin of Securities Acts of 1933 and 1933 (Beatty, Samuelson & Bredeson, 2013) C. Genesis of the enactment of The Foreign Corrupt Practices of 1977. D. Origin of Sarbanes-Oxley Act and its enactment (retrieving information from: https: www.soxlaw.com/introduction.htm) 11. Securities Acts of 1933 and 1934 A. Registration requirement includes the statement and prospectus B. Annual, Quarterly reports and Form 8-k C. Inside Trading D. Private Offerings E. Blue Sky Laws F. Antitrust (The Sherman Act, The Clayton Act, and The Robinson-Patman Act) 111. The Foreign Corrupt Practices Act (FCPA) of 1977 makes it illegal for an American businessperson to give anything of value to any foreign official in order to influence an official decision. A. Applicability of the Act B. Prohibitions under the Act C. Penalties for Violations of the Act 1. Criminal 2. Civil 3. others D. Defense under FCPA 1. Lawful payment 2. Bona fide expenditures E. Fraud/Scandal of the FCPA of 1977 1. Detection method 2. Importance of Early Detection 3. Big problems for small corporations/organizations 4. Types of fraud and who is involved 1V. Sarbanes Oxley Act A. The effects of...
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...The U.S. Securities and Exchange Commission regulates the financial disclosures and trading operations of public companies. It mission is to protect investors and maintain orderly and efficient markets and to assets companies in raising capital. It is also in charge of overseeing the company’s financial reports and to market its activity and powers the levy fines and lawsuits will be filed if rules are broken. Starbucks is the world’s largest coffeehouse company in the world with more than 11,000 in the U.S and employing many. The ethics and compliance plays an important role in the company and applies to the regulations of the Securities and Exchange Commission (SEC). Starbucks has its ways of complying with every direction in its quarterly and annual filings and has a committee of auditors that keeps everyone informed on the filing of the SEC. Its auditor’s main purpose is to have control over the financial reporting processes of the company and it makes sure that the Starbucks is complying with all rules and regulations that is required by the SEC. There are several financial reporting such as the Company’s Annual report to shareholders, the Annual Report form 10-K and Starbucks reports along with other amendments files with or reported to the Securities and Exchange Commission are made available by its reporters. The commission has a checklist on reviewing the audit processes with independent auditors and management. Any issues with management where they are unhappy with...
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...L. Madoff Investment Securities was formed. However, a few people were not fooled and saw the danger behind the facade. A few people heeded the warning sign that were evident all around Madoff. They filed reports with the SEC on several occasions but they were too inexperienced to look deeper. In the end the story holds us not because of the engrossing details of the scam, but because of its human element. Madoff emerges here not as some master criminal, but as a sad man who sad man of weak character who committed one of the crimes of the century, instead of simply telling the truth. His story is not the story of ridiculous greed but more the picture of our unlimited aptitude for self-delusion. Bernard L. Madoff was arrested in December 2008 for defrauding thousands of individuals and organizations of billions of dollars for over two decades. The part of Madoff’s investment advisory company involved in private-investment or assess-management was where all of his illicit activities were carried out. In fact, most employees had no ideal he was stealing from his clients. Madoff had perpetrated an outsized Ponzi scheme, a Brobdingnagian con game (Lewis, 2012). In March 2009, Madoff pleaded guilty of soliciting funds to buy securities and failing to invest the money. He used the money instead, as did the notorious Charles Ponzi, to pay returns to early investors and for his own benefit. According to the initial reports of the office of the U.S. Attorney, at the end...
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...responsibility to the public. This act specifically tried to reduce unethical corporate behavior and increase public confidence in the financial reporting of corporations (Kimmel, Weygandt, & Kieso, 2011). This paper will address if the requirements of SOX will be enough to prevent future fraud in the corporate environment. Regulatory Environment Several laws and regulations have been developed to attempt to control business practices. Corporations must follow rules that were established to protect the public from fraud such as fair practice laws, and regulatory agencies must ensure compliance with these long-standing regulations. The U.S. Securities and Exchange Commission, (SEC), “was developed to help protect investors, maintain fair, orderly, and efficient markets, and facilitate capital information” (U.S. Securities and Exchange Commission, 2015). The SEC was created in 1934 in response to the loss of public confidence in financial markets after the stock market crash of 1929 and the years following the Great Depression. The main goal of establishing the SEC was to restore investor confidence in the markets by providing more precise and reliable information for investors and creating an environment that protected the investor first. Both public and private investors can invest in corporations, and the SEC requires disclosure of meaningful financial...
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