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Ethical And Legal Obligations

Introduction
            The Accounting profession has been established since the early 1900s. The profession has continued to develop in response to the needs of users of financial statements for financial information to support decisions and informed judgments. This paper will discuss the various accounting standards and their relationships, accounting theories, and evaluate the role of ethics in accounting.
Financial Accounting Standards Board
The Financial Accounting Standards Board (FASB) was organized in 1973. FASB has been recognized as the designated organization in the private sector for establishing standards of financial accounting and reporting. They are officially recognized by Securities Exchange Commission as being authoritative. The council at present consists of 30 members who are broadly representative of preparers, auditors and users of financial information. The standards "govern the preparation of financial reports and are essential to the efficient functioning of the economy because investors, creditors, auditors, and others may rely on credible, transparent and comparable financial information" (valuebasedmanagement.net). Whereas, the Securities and Exchange Commission (SEC) has statutory authority to establish financial, accounting and reporting standards for publicly held companies under the Securities Exchange Act of 1934. However throughout its history, the Commission's policy has been to rely on the private sector for this function to the extent that the private sector demonstrates ability to fulfill the responsibility in the public interest.
The FASB mission is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors and users of financial information. The FASB develops broad accounting concepts as well as standards for financial reporting. FASB also provides guidance on implementation of standards. It is found that concepts are useful in...