Accounting Quality

Accounting Quality, Auditing and Corporate Governance

1. Introduction

2. Article Summary

The past…

* history of development

Demand of auditor

- In1929, market crashed, congress become congress become convince that it was due to the lack of reporting requirements to protect investor and creditor

- SEC establish the financial reporting standard 1937, they required all publicity traded corporations to have an independent audit each year

- The independent auditor should be fairness to shareholder. Would note any deviation from the acceptable accounting rules.

The role of corporate board

- who responsibility were to meet and oversee the manager of the entity and look for interest

-20th , audit committee was established to provide an interface independent auditor and management , and they was designed to add to the quality and integrity.

Auditing standard and accounting rule.

- 20th , the weaknesses in auditing from fraud and corruption.

- AICPA formed the Committee on accounting procedure( CAP)

- FASB( financial accounting standard board develop the standard and decision making .

Question of accounting quality arise

CPA firm played as both independent auditor and manager, and create about the underlying integrity and quality of the financial reporting process.

FASB is required to address the limitation of the historical cost principle.

The auditing as a commodity

- the mid 1970, in response to pressure from Federal Trade commission , the rule of the AICPA change to permit CPA firm to advertise,

The present…

Government , financial reporting and management incentive

- Propose changing in accounting, auditing and corporate governance

The future…

- aimed to enhancing the future quality and integrity to the financial reporting process

3. Analysis/ Critique of the article( Cindy)

- Strengths of the article

There are strong supporting opinion

- Weaknesses of the article

- Recommendation

4. Relevance of the article...