Accounting Standards in the U.S.

Team 1: Argue That the SEC Should Set Accounting Standards in the U.S.

In all material respects, the Financial Accounting Standards Body (FASB) has virtually failed in ensuring that financial situation and results of operations of any corporate entity are fairly presented by an independent accounting body. Taking the United States, for instance, there has been a growing decadency in the manner in which most state corporations have lacked behind in the global financial landscape despite its significant transformation. Most attributable to the recent economic and political climates, many renowned U.S corporations are virtually risking their global standings in the competitive business world for the lack of proper accounting standards being put in place. For this reason and many others, the Securities and Exchange Commission (SEC) which holds the primary responsibility of ensuring that the federal security laws in the stock-exchange market are effectively enforced and followed should set aside appropriate accounting standards in the U.S.

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To begin with, the SEC body, in itself has all the resolute powers to not only propose security rules but also regulate the securities industry. As a corporate registrar of both domestic and international bodies, SEC is tasked with the responsibilities of full automation of public corporations and partnerships, amending the various articles of incorporation as well as licensing of foreign corporations. With all these authoritative powers vested in a single body, it is therefore indisputable for the governing body to fail in achieving its accountability and transparency objectives. Furthermore, there is no concrete reason as to why there should be a financial hitch whatsoever in the reporting and presentation of financial information in both public and private institutions.

The most recent corporate scandal involving electronics conglomerate Toshiba saw the company's CEO admitting an overstatement in earnings of a whopping $2 billion in seven years! Such a scandal was one of the worst accounting scandals ever reported in history where Billions of taxpayers' money have been lost in financial disasters as a result of excessive greed by a few individuals. Other grueling corporate scandals such as the Enron of 2001, WorldCom of 2002 and Tyco Scandal of 2002 would have been avoided had the FASB rules and regulations been long set in the U.S. Furthermore, the flexibility tendency of SEC in relying too much on the managerial intent have allowed management in most companies to lag behind in managing company earnings thereby leaving the financial systems bare for manipulation. More so, the lack of exercise of direct government oversight has greatly resulted in diminishing the quality and effectiveness of accountants to audit due to a potential erosion of independence.A perfect case in question is the Enron Scandal that prompted the Sarbanes-Oxley scandal in the mid-2002.

Team 2: Argue That the Fasb Should Set Accounting Standards in the U.S.

With the recent tendency by government bodies to set aside accounting standards in countries that lack the capitalistic aspect of the economy, it is inevitable for the Financial Accounting Standards Body (FASB) to ensure that proper accounting standards are put in place. Over the past two decades, the U.S, in particular, has suffered the vice of an improper accounting standards being instituted in most of its capitalistic states. The result of this improprieties has always been clandestine of falsified accounting records in major corporate entities leading to loss of Billions of taxpayers' money in the trenches and annals of corruption.

Therefore, FASB, as an accounting body mandated with the role of developing financial reporting framework should set aside accounting standards as the cornerstone principle used to regulate and protect investors from exploitation. Furthermore, the appropriate set financial standard will help promote an informed decision through full and fair disclosure of financial information. Also, the quality of the financial information present in the books of records is pertinent for financial markets and investors for decision-making. Consequently, potential investors and marketers only allocate their capital in businesses that poise reliable financial information and comparable investment.

However, for big governments that makes rules regarding accounting standards, countries that are non-capitalistic end up with a cookie-cutter approach to financial statements thus lacking the flexibility for professional judgments to be made. In this regard, FASB should, by all means, ensure that accounting standards should be put in place to regulate sound international frameworks that will not only enhance the vitality of capital markets but also encourage investors to put their finances in the stock exchange market. Furthermore, the adoption of international Disclosure Standards within the United States will provide comprehensive information about the policy statements of the FASB when addressing the legal issues for audit reasons.

Whereas, the standards provided by the FASB are aimed to provide financial statements that fairly present financial statements, taking into consideration the circumstances in which a company operates, its introduction into the U.S markets will be important. Notwithstanding, the accountants who are the persons mandated with keeping financial records rather than the government officials, best understand their role and how best to measure and report financial information. In this regard, ensuring that a viable accounting standard is put in place to not only help regulate the financial aspect of corporate entities but also ensure the smooth running of those entities is vital for growth and development of the country.

In conclusion, it is important that both SEC and FASB set accounting standards in the U.S. The two bodies are important in regulating the federal securities acts as well as help in defining the financial position of companies within the U.S.