The Roles of AICPA, AAA, SEC, FASB, ICAB & ICMAB. - Accounting theory
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Transcript of The Roles of AICPA, AAA, SEC, FASB, ICAB & ICMAB. - Accounting theory
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Green university of Bangladesh Assignment
On
Accounting Theory
Topic name: The Roles of AICPA, AAA, SEC, FASB, ICAB & ICMAB.
Prepared for:
Shahreen Sonia
Lecturer, Accounting Theory
Department of Business Administration (DBA)
Green University of Bangladesh (GUB)
Prepared by:
Anqur Chowdhury
Dept. of Business Administration
ID: 110106027
Program: BBA (11th)
Green University of Bangladesh
Date: July 22, 2014
Anqur Chowdhury
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Table of Content
SL No. Topic name Page No.
I. Letter of Transmittal 3
II. Definition of American Accounting Association (AAA) 4
III. The roles of the American Accounting Association 4,5,6
IV. Definition of 'American Institute of Certified Public Accountants
(AICPA)6
V. AICPA President Details Six Leadership Roles for the Institute 6,7
VI. Definition of FASB 7
VII. The role of FASB 7,8,9
VIII. Definition of 'Securities And Exchange Commission (SEC) 9
IX. Securities and Exchange Commission Roles (SEC) 9,10
X. Institute of Chartered Accountants of Bangladesh (ICAB) 10
XI. Roles of the ICAB 11
XII. Institute of Cost and Management Accountants of Bangladesh
(ICMAB)
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XIII. The major plays role of the ( ICMA) 12,13
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Letter of Transmittal
July 22, 2014Shahreen Sonia
Lecturer, Accounting TheoryDepartment of Business Administration (DBA)Green University of Bangladesh (GUB)
Subject: Submission of an assignment.
Dear Madam,
I gladly present to you the assignment titled “Definition and Role of AICPA, AAA, FASB, SEC, ICAB and ICMAB.” I have made the assignment as you give me to do by help of your lecture sheet and internet.
I believe the knowledge and experience I gathered during the assignment will be extremely helpful in my future academic life and professional life. I will be grateful to you if you accept the assignment.
Your support in this regard will be highly appreciated.Thanking you.
___________________Anqur Chowdhury
ID: 110106027
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Definition of American Accounting Association (AAA):
An organization that supports worldwide excellence in accounting education, research and
practice. The American Accounting Association is the primary professional association for
accounting academics in the United States. Formed in 1916 under the name American
Association of University Instructors in Accounting, it assumed its current name in 1936. It is a
voluntary organization comprised of individuals interested in accounting education and research.
The roles of the American accounting association:
Education for the accounting profession must produce graduates who have a broad array of skills
and knowledge.
To be successful, an individual must bring to the practice several general skills. These are
divided into three categories:
Communication skills
Intellectual skills
Interpersonal skills
Accounting and Auditing skills
The categories are not mutually exclusive and cannot be considered in a vacuum. Obviously the
communications skills are highly interrelated with the interpersonal skills, and some of the
intellectual skills are dependent on some of the communication skills. The curriculum must
support all of these skills.
Communication Skills:
Public accounting requires its practitioners to be able to transfer and receive information with
ease. Practitioners must be able to present and defend their views through formal and informal,
written and oral, presentation. They must be able to do so at a peer level with business
executives.
As the rate of change in the business world increases, so does the amount of information that
must be gathered from outside sources. Practitioners must be able to listen effectively to gain
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information and understand opposing points of view. They also will need the ability to locate,
obtain and organize information from both human and electronic sources.
Intellectual Skills:
Individuals seeking to be successful in the diverse world of public accounting must be able to use
creative problem-solving skills in a consultative process. They must be able to solve diverse and
unstructured problems in unfamiliar settings. They must be able to comprehend an unfocused set
of facts; identify and, if possible, anticipate problems; and find acceptable solutions. This
requires an understanding of the determining forces in a given situation and the ability to predict
their effects. The practice of public accounting, like the practice of any profession, includes
many challenging pressures. Conflicting demands, unexpected requirements and coinciding
deadlines are but a few of the sources of stress found in practice. The effective practitioner must
be able to manage these pressures. This requires the ability and judgment to select and assign
priorities within restricted resources and organize work to meet tight deadlines when necessary.
Interpersonal Skills:
The ability to work with other human beings is an important part of public practice. Working
effectively in groups with diverse members to accomplish a task is essential.
The practitioner must be able to influence others; organize and delegate tasks; motivate and
develop other people; and withstand and resolve conflict. These are the skills of a competent
manager. Because public accountants advise clients on the operation of their businesses, they
should possess the requisite management skills. They must also be able to assume leadership
positions within their own firms.
Accounting and auditing skills:
Post-secondary education should provide a strong fundamental understanding of accounting and
auditing. This includes the history of the accounting profession and accounting thought, as well
as the content, concepts, structure and meaning of reporting for organizational operations both
for internal and external use. A companion area includes the methods for gathering, summarizing
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and analyzing financial data. Entering practitioners must also understand the meaning and
application of, as well as the methodology for, attest services.
Accounting knowledge cannot focus solely on the construction of data. The ability to apply
decision rules embodied in the accounting model is only a part of the goal. Accountants must be
able to use the data, exercise judgments, evaluate risks and solve real-world problems.
Definition of 'American Institute of Certified Public Accountants –
AICPA:
The non-profit professional organization of certified public accountants in the United States. The
American Institute of Certified Public Accountants was founded in 1887, under the name
American Association of Public Accountants, in order to ensure that accountancy gained respect
as a profession and that it was practiced by ethical, competent professionals. The AICPA exists
to provide more than 370,000 members with the resources, information and leadership to provide
CPA services in the highest professional manner.
AICPA President Details Six Roles for the Institute:
In a speech made to the Yale Club in New York on September 4, 2002, AICPA President Barry
C. Melanoma announced that the American Institute of CPAs (AICPA) is committing to
fulfilling six leadership roles to help restore confidence in the accounting profession.
Highlights of the six roles:
1. Obtain greater involvement of users of financial statements in setting auditing standards,
while developing new guidance on such topics as auditor rotation requirements and
compensation policies for audit partners.
2. Serve as a liaison between market institutions and corporations, finding new ways to
communicate anti-fraud controls and programs to the public and facilitating input on
these measures from stock exchanges and others, (e.g., in the form of a "summit"
meeting).
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3. Promote academic research into such topics as how investors can help protect themselves
against fraud through alliances, such as one with the Association of Certified Fraud
Examiners.
4. Change the continuing education rules for CPAs to include more credits on fraud
detection and help develop educational and training materials for inclusion in college
courses and textbooks, as well as training courses for management and directors.
5. Initiate debates on such topics as big GAAP/little GAAP, (i.e., use of the same or
different generally accepted accounting principles for big and small companies), and
work with other standard-setters in improving transparency of financial and business
reporting.
6. Revise standards so the public will be put on notice when an auditor communicates
internal control weaknesses to an audit committee.
Definition of FASB:
A seven-member independent board consisting of accounting professionals who establish and
communicate standards of financial accounting and reporting in the United States. FASB
standards, known as generally accepted accounting principles (GAAP), govern the preparation of
corporate financial reports and are recognized as authoritative by the Securities and Exchange
Commission.
The role of FASB:
In 1973, the Financial Accounting Standards Board was established to develop a set of financial
accounting standards known as generally accepted accounting principles for the private sector.
GAAP instruct companies on how to prepare financial reports. Having a set of standards ensures
businesses disclose the same information in a uniform manner. The Securities and Exchange
Commission and the American Institute of Public Accountants officially recognize the FASB as
the authority on financial accounting. It is a private, not-for-profit organization.
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Authority: The FASB has a unique position in the financial reporting process. Its main goal is
to provide leadership for public companies in establishing and improving the accounting
methods used to prepare financial statements. The FASB has the authority to set, but not enforce,
accounting standards. Enforcement falls under the jurisdiction of the SEC. The FASB takes
recommendations from the SEC and the AIPA when devising or improving standards; however,
it is not required to. It also considers the feedback from businesses when making changes to
current standards.
Financial Statements: The goal of financial accounting standards is to help stakeholders
make informed investment decisions based on honest financial statements. The standards are
designed to promote transparency in financial reporting. When information is transparent, it is
visible and understandable to the public. This enables potential investors and creditors to make
accurate evaluations of the businesses' finances. Accounting standards also help the board of
directors to assess management's effectiveness. Financial statements identify areas that need
improvement and enable the boards to take early corrective actions.
Impacted Areas: The accounting standards developed by the FASB directly impact how
businesses report items such as inventory costs, debt, assets, revenue, stockholder's equity and
taxation. For example, in 2010 the FASB announced that businesses must report revenue in the
period it is earned. Previously, companies were able to report revenue when it was received. This
standard greatly affects the income statement -- a statement of the company's profits and losses.
When all companies in one industry are required to report revenue in the same manner, the
public can compare their financial statements to each other more easily.
Depreciation of Assets: The FASB allows businesses to choose how they depreciate assets
on their financial statements, but they must disclose the method they use and use it consistently
for the life of the assets. Since the method of depreciation affects areas such as expense accounts
and net income, it affects the amount of income taxes due. The Internal Revenue Service also
allows businesses to choose their method of depreciation, but like the FASB, they must disclose
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the method and use it consistently. Most businesses choose the depreciation method that results
in the least amount of taxes owed.
Definition of 'Securities And Exchange Commission (SEC)
SEC'A government commission created by Congress to regulate the securities markets and
protects investors. In addition to regulation and protection, it also monitors the corporate
takeovers in the U.S. The SEC is composed of five commissioners appointed by the U.S.
President and approved by the Senate. The statutes administered by the SEC are designed to
promote full public disclosure and to protect the investing public against fraudulent and
manipulative practices in the securities markets. Generally, most issues of securities offered in
interstate commerce, through the mail or on the internet must be registered with the SEC.
Securities and Exchange Commission Roles (SEC):
The Securities and Exchange Commission works to oversee corporate takeovers and to protect
investors in the United States. Established by the U.S. government, SEC requires that publicly
traded companies disclose their financial information to the general public. Investment advisers
are required to specify the volume of managed assets and the services offered. They should
disclose their payment schedule, including fund expenses and custody and brokerage fees.
Investment advisers must disclose disciplinary information, along with risk assessment and
investment strategies, and methods of analysis. In addition, the Commission requires that
advisors offer information about their brokerage practices and code of ethics. Finally, they are
required to disclose trade aggregation, directed brokerage, client referrals, as well as soft dollar
practices.
The main role of the Securities and Exchange Commission is to enforce regulations for self-
regulatory bodies, created to oversee the work of various entities. These include public utility
companies, stockbrokers, investment advisers and companies, as well as publicly held
companies. There are different self-regulatory bodies, among which FINRA and MSRB. The
National Association of Securities Dealers is a non-government organization that regulates
NASDAQ. The Financial Industry Regulatory Authority offers information on certifications,
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designations, and charters. The MSRB or Municipal Securities Rule Making Board is a
regulatory body that aims to protect local and state authorities, investors, and the general public.
The goal of MSRB is to collect information on price transparency and it seeks input from
different parties. The aim of the board is to create and update rules and to ensure that municipal
bodies act in compliance with them. MRSB maintains a database to offer reliable, secure, useful,
and timely information. The goal is to protect market participants and ensure that the market
operates correctly. The Municipal Securities Rule Making Board also engages with policy
makers, regulatory agencies, and municipalities. The aim is to protect municipal agencies and
investors by promoting fair and transparent practices.
The role of the Securities and Exchange Commission itself is to maintain efficient, transparent,
and effective markets. SEC oversees the involvement and operations of organizations and
individual investors. The Commission monitors securities companies, self-regulatory
organizations, and the stock markets.
Institute of Chartered Accountants of Bangladesh (ICAB):
The Institute of Chartered Accountants of Bangladesh (ICAB) is the national professional accountancy
body in Bangladesh. It is the sole organization in Bangladesh with the right to award the Chartered
Accountant designation. It has around 1,400 members.
It was established under the Bangladesh Chartered Accountants Order 1973 (Presidential Order
No. 2 of 1973). The Ministry of Commerce, Government of the People's Republic of Bangladesh
is the administrative Ministry of the ICAB. The mission of the ICAB is to provide leadership in
the development, enhancement and coordination of the accountancy profession in Bangladesh in
order to enable the profession to provide services of consistently high quality in the public
interest.
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Roles of the ICAB:
The Institute of Chartered Accountants of Bangladesh (ICAB), the National Professional
Accounting Body of Bangladesh established under the Bangladesh Chartered Accountants Order
1973(President's Order No. 2 of 1973).
The Institute has the following the roles:
1. Regulates the accounting Profession and matters concerned there with in the country
2. Administers its members and students
3. Ensures sound professional ethics and code of conduct by its members
4. Provides specialized entraining and professional expertise in Accounting, Auditing,
Taxation, Corporate Laws, Management Consultancy, Information Technology and
related subjects
5. Imparts Mandatory continuing Professional Education (CPE) to its members
6. Fosters acceptance and observance of International Accounting Standards(IAS)and
International Standards on Auditing (ISA)and adopt IAS & ISA in Bangladesh as
Bangladesh Accounting Standards(BAS)and Bangladesh Standards on Auditing (BSA)
respectively
7. Keeps abreast of latest developments in Accounting techniques, Audit methodology,
Information technology, Management consultancy and related fields
8. Liaises with regional and international organizations to influence the development of
efficient capital markets and international trade in services.
9. Identify different forms of businesses and specify their advantages and disadvantages
10. Identify the differences between businesses carried out by sole traders, partnerships,
limited liability partnerships, alliances and groups, and show the advantages and
disadvantages of each of these structures
11. Identify the differences between unincorporated businesses and companies, and show the
advantages and disadvantages of incorporation.
12. The role of finance and account in will be able to identify the purpose of financial
information produced by businesses and specify how accounting and finance functions
support business operations, including the management of working capital.
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Institute of Cost and Management Accountants of Bangladesh (ICMAB):
The Institute of Cost and Management Accountants of Bangladesh (ICMAB) at Nilkhet, Dhaka,
Bangladesh is the only institution in the country dedicated to Cost and Management Accounting
education and research. It is managed as an autonomous professional body under the Ministry of
Commerce.
As well as education, it is also engaged in regulating and promoting the profession of cost and
management accounting in Bangladesh. The Institute is managed by a National Council of 16
members. It is a member of the International Federation of Accountants (IFAC), Confederation
of Asian and Pacific Accountants (CAPA), and South Asian Federation of Accountants (SAFA).
ICMAB members are known as CMAs with their designator title ACMA and FCMA. They play
leading roles in the accountancy and finance profession in Bangladesh. 30% of members live and
work in UK, USA, Canada, Australia and Gulf Countries. ICMAB UK Chapter is a lively forum
for members working in the UK.
The major plays role of the ICMAB is to:
Regulate and develop the Cost and Management Accounting (CMA) profession in
Bangladesh.
Provide and confer the highest professional degree in Cost and Management Accounting.
Impart education and training to the members, corporate managers and intending students
of CMA for enhancing their capability in the fields of Cost and Management Accounting
Develop knowledge, skills and competence of the CMAs needed to support economic
development of the country and, thus, to prepare capable manpower needed for various
national and international development activities according to the requirements of the
millennium.
Help development, adoption and implementation of International Financial Reporting
Standards (IFRS) in Bangladesh.
Formulate, adopt and implement Cost Accounting and Auditing Standards (CAAS) in
Bangladesh and international arena.
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Implement statutory Cost Audit as provided in the Companies Act, 1994.
Regulate and develop the Cost and Management Accounting (CMA) profession in
Bangladesh
Provide and confer the highest professional degree in Cost and Management Accounting
Impart education and training to the members, corporate managers and intending students
of CMA for enhancing their capability in the fields of Cost and Management Accounting
Develop knowledge, skills and competence of the CMAs needed to support economic
development of the country and, thus, to prepare capable manpower needed for various
national and international development activities according to the requirements of the
millennium
Help development, adoption and implementation of International Financial Reporting
Standards (IFRS) in Bangladesh
Formulate, adopt and implement Cost Accounting and Auditing Standards (CAAS) in
Bangladesh and international arena.
Implement statutory Cost Audit as provided in the Companies Act, 1994
Conduct research in the field of Cost and Management Accounting in order to promote
and develop the profession to meet the requirement of the time.
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Reference:
http://biztaxlaw.about.com/od/glossaryf/g/fasbdefinition.htm
http://www.fasb.org/facts/
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http://www.readyratios.com/reference/accounting/
financial_accounting_standards_board_fasb.html
http://www.investopedia.com/terms/a/american-institute-of-certified-public-
accountants.asp
http://www.aicpa.org/About/Pages/About.aspx
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standards.html#sthash.Pc0Y0Ebo.dpbs
http://www.accountingweb.com/topic/aicpa-president-details-six-leadership-roles-
institute
http://www.investopedia.com/terms/a/american-accounting-association-aaa.asa
http://aaahq.org/about.cfm
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https://aaahq.org/about/SOR.pdf
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responsibilities
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Commission-U-S.html
http://www.history.com/topics/securities-and-exchange-commission
http://en.wikipedia.org/wiki/Institute_of_Chartered_Accountants_of_Bangladesh
http://www.icab.org.bd/index.php?
option=com_content&view=article&id=51&Itemid=55
http://www.icab.org.bd/images/stories/download/ca_syllabus/knowledge_level.pdf http://
en.wikipedia.org/wiki/Institute_of_Cost_and_Management_Accountants_of_Bangladesh
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