Many people wonder why the idea of regulating accounting is becoming so popular. Due to past experiences with manipulating accounting figures, it is no wonder that accounting has been under so much scrutiny. This is why so many people feel it is time to regulate accounting due to so many companies not abiding by the rules set forth. Because of the many adverse incidents that have occurred with different scandals and schemes, there has been a lot of mistrust from the public in the accounting field. Regulating accounting will give confidence back to the public. Here are some benefits that will arise when we set higher standards to regulate accounting.
Most of the public feels that accountants are working in the interest of their own company and the companies they work for instead of working to inform the public properly. When you regulate accounting, this prohibits any company and accounting firm from hiding the truths about the company and its financial status from the public. Accounting regulation will force companies and their accountants to be more open and straightforward about their financial dealings and show their financial situation.
When you regulate accounting, it will play an essential role in the stock market as well. There are many mixed feelings about investing in publicly traded companies because of the capabilities to hide a company’s financial distress. Regulating the accounting laws will lower the chances of a company being able to manipulate any financial reports shown to the public. This dilemma has happened in the past.
When you regulate the accounting laws, you will hold corporations and public organizations responsible for their actions. This is an essential part of regulating accounting practices. With stricter laws to prevent fraud and special favors, the public will be safer against fraud. Regulating the laws will not make accounting firms and businesses alike aware that they will be held accountable for their actions. Not only will this give confidence back into the accounting field, but it will also deter fraudulent activities in the accounting industry due to the strict consequences.
The most crucial reason to regulate accounting laws is to protect the public. Whether it is a publicly traded company or a company that gains a majority of investments from its workers, both need to be protected from fraudulent activities. This is very important and is why the government has learned to regulate accounting and its laws and practices. Experience has proven that not having strong accounting guidelines in place and enforced only leaves room for disastrous results.
There are many mixed feelings regarding the idea of regulating accounting. However, despite the mixed opinions, regulating accounting is vital. It is not only the responsible thing to do, but it will also safeguard the public from companies and fraudulent activities that could occur. Not regulating accounting laws and practices will only leave room to gather more mistrust in accounting.