The heat
Accounting and bookkeeping is a complex task (hey, that’s why you’re here, right?). One wrong calculation and the whole system falls apart. For small business owners, the right bookkeeping techniques are essential to keeping the business on track. And if things fall apart, a lot of people are impacted: The business owner and his or her family, suppliers, customers, distributors, employees.
The larger a business gets, the bigger that “impact footprint” gets. More and more people are impacted by even small financial decisions. Enron, Worldcom, and Tyco are excellent examples of circumstances where unethical financial decisions impacted A LOT of people. And, although the jury is still out on who should be held at fault, today’s economic turmoil has resulted (in part) from allowing so many high risk loans.
With that in mind, it’s no wonder that the accounting and bookkeeping world have their own version of “the heat” – watchdogs and, we might even say police. Okay, so these police don’t show up in dark blue uniforms and tricked out cars with flashing lights. But they do bring a certain degree of law enforcement to the industry.
In his article “Accounting Police: Do They Exist?” John W. Day talks about the role of the Financial Accounting Standards Board (FASB) and the Securities Exchange Commission (SEC) . To this list I would add the IRS which (with the help of lawmakers) creates and enforces some financial laws related to taxation. Oddly enough, there isn’t one over-arching financial oversight lawmaker. Each of these organizations, plus the accountants’ and bookkeepers’ own “self-policing” efforts, help to keep things from turning into anarchy. In some ways, the police and the Federal Trade Commission also play a role.
Compare that to the folks over in the UK who have the Financial Services Authority. This organization seems to have broader powers and might be considered a one-stop shop for many of the action and efforts that the US’s multitude of organizations cover.
Now, I’m not saying that one way is better than the other. To be honest: I’m not fully familiar with the UK’s FSA and its mandate compared with other government organizations. But, from my perspective, it seems to be a better way to bring oversight to an extremely complicated industry.
Jessica Routier, IAC-EZ
