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How Useful Are commission Reports on Financial Statements? by Jonathan B. Schiff , Claire B. May The heed makeup now included voluntarily in many incorporate annual compensates soon whitethorn become a requirement under a nude as a jaybird Securities and Exchange Commission ( s) rule. Management responsibilities for the content of financial line of reasonings as well as the effectiveness of the internal controls system be two features approximately likely to be addressed. The centering report besides is a focal point of the March 12, 1991, movie draft, Internal Control--Integrated Guidance, print by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The companies that score issued management reports voluntarily have done so in response to an precedent SEC request. Our analysis of this voluntary respectfulness over the stretch out six years suggests these companies have utilise the management report to improve communication with the finan cial narration user and corporate stakeholder communities. PREVENTING ABUSE Interest in the management report began most 1977 when Congress passed the Foreign Corrupt Practices proceed (FCPA) to control contestable or illegal foreign payments by U.S. companies.

To improve the ingenuousness of financial reporting and to prevent abuses from occuring, the FCPA also undeniable that every public companies keep adequate records of their financial activities and maintain a system of internal news report controls. To advertise these goals, in 1979 the SEC proposed a rule that would have required management of in public trade d firms to include a Report of Managements R! esponsibilities in the annual reports to stockholders. In this report, management would have acknowledged its tariff for internal accounting control. This proposed rule was withdrawn, however, due to opposition to a requirement that this statement be examined and reported on by an independent accountant. The management reports costs versus benefits were questioned. Beginning in the new-fashioned 197Os, the...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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