Generally Accepted Accounting Principles Essay Example | Topics and Well Written Essays - 1500 words

Generally Accepted Accounting Principles - Essay Example Generally Accepted Accounting Principles It is the core responsibility of the board of directors to ensure that the company’s financial statements are honest. The auditors perform a check on these financial statements to ensure that they reflect the true and fair view of the respective organization. An audit tests the authenticity of the financial statements and their validity for use by the public. The internal users of these statements are the management and the board of directors while external users include; shareholders, investors, tax authorities, and the interested public. Therefore, all public listed organizations must make their financial statements accessible for all. Presenting the true and fair view of financial information has faced criticism from analysts due to the recent financial scandals. Disclosing financial statements is an activity subject to fraud and misconduct from the relevant bodies. Financial scandals arise from this disclosure as organizations tend to; misusing funds, overstating the value of organization assets, overstating revenues, understating expenses, or the underreporting the existence of liabilities. Financial scandals are often orchestrated by the organization’s officials, which include the board of directors, who, sometimes, tend to collude with the auditors. A board of directors is an independent body, either elected or appointed, to oversee the activities of an organization. A company’s board of directors must include individuals responsible for the functioning of the accounting department.