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Generally Accepted Accounting Standards Paper The success of a company relies on more than attractive numbers, the constant evaluation, and tests of transactions. The data provided in the financial statements is important to many people. The internal and external users share a common interest to show the financial stability of a company. Public entities are expected to do the right thing, which means the public holds organizations accountable. The individuals who can measure rely heavily on accurate financial statements are: potential investors, taxpayers, creditors, public attention, products and services. Deception brings a loss of confidence, which can create a “butterfly effect” that ends in a negative impact on the bottom line. Public sector principal-agent conflicts may arise in several instances. A primary conflict may arise between the goals of the department/bureau head and the goals of the resource providers' representative during the budget process. The goals of the bureaucrat may be to maximize the bureau's operating budget in order to consume perquisites or due to an altruistic belief in the importance of the bureau's mission. The elected official is often concerned with public accountability at election time for the funding and operation of multiple bureaus (Sinason, 2000, p. 3). Enron and WorldCom have given public trading organizations trouble with trust. Sarbanes-Oxley Act is created to help ensure and return investor and consumer confidence. For auditing purposes documents are to be held for seven years; president of the California Board of Accountancy, Navid Sharafatian, Esq states: State Boards such as the California Board of Accountancy continue to be the only regulatory entities that can issue individual or firm certified public accounting licenses, or revoke those license [sic] because of actions resulting in consumer harm; additionally state boards will continue the very important role of overseeing auditors of privately-held companies, nonprofit, and government agencies (par 6). This puts restrictions for nonaudit services given to audit clients. The Sarbanes-Oxley Act has created a five member team whose job it is to oversee the auditors of publicly traded companies; surprisingly the board is comprised of non CPA’s. The board has the sole authority and discretion to enforce audits, maintain requirements, set standards, and quality control (Sharafatian, 2002). GASB has made adjustments to the auditing standards, eliminated the requirement to modify the accounting principles in the auditor's report. GASB Statement 16 requires that state and local government entities, including public benefit corporations and authorities, governmental utilities, governmental hospitals and other healthcare providers, and governmental colleges and universities, is representative of accounting principle changes that require the auditor to make a decision regarding whether the impact of the change in principle is material with respect to the financial statements (Sinason, 2000, p. 2). The new reporting standards give a better evaluation and comparisons of entities. As financial data continues to set a higher demand for public accounting; adding more disclosures may provide more assurance to the external users. Scrutinizing and accountability help to assess for improvements and watch the changes made through internal controls. The design of internal control is to ensure and protect the assets of government and public entities. “Sarbanes-Oxley requirements, management is charged with performing an evaluation at least annually” (Warfield, 2007, par 24). Internal controls provide assurances that the requirements are met. The ramifications for the lack of providing the necessary “increasing scrutiny and demand for accountability by the public” on a non-profit organization or small public sector could deter investments. Whereas, a government entity has a more lasting effect on the economy: contribute to unemployment, slow down economic growth, reduce revenues and may lead to a reduction to the standard of living. By understanding the process businesses around the world can to manage the financial requirements needed to stay in current Code of Ethics. Understanding and demonstrating these concepts permit any entity to prove and clearly show a flow of accounting information and services. Both internal employees and external clients such as banks, lenders, stockholders, and customers, and government agencies rely on the accuracy of truthful financial data. . In Ethical Issues in the Practice of Accounting, 1992, Michael Josephson expresses his idea of "Ten Universal Values" that financial statement prepares and auditors should be liable for. Alphabetically ordered but not but order of importance: accountability, caring, fairness, fidelity, honesty, integrity, promise-keeping, pursuit of excellence, respect for others, and responsible citizenship (Smith & Smith, 2009). The mark of a true qualified auditor and preparer is to persist, despite any personal difficulties, law changes, and economic uncertainties. It may not be easy but finding a way to make the wrong right and continue to develop and grow, despite of the trials and issues that may have various solutions. The code of ethics is not meant to hinder choices but is a blueprint for various ethical dilemmas and used as a first aid kit in helping solve ethical problems. Dr. Katherine T. Smith and Dr. L. Murphy Smith discuss the difficulties that face those who must report the good, the bad, and the ugly of the bottom lines: “To aid its 100,000 members in resolving ethical dilemmas, the Institute of Management Accountants recently established an ‘ethics hotline.’ Ethics counselors offer confidential advice, solace, and comfort to management accountants who may have no other place to turn for help” (2009, par 18). Resources California Board of Accountancy. (2005). A Manual of Disciplinary Guidelines and Model Disciplinary Orders 6th Edition 2005. Retrieved November 20, 2011, from www.dca.ca.gov/cba Sharafatian, N. (Fall 2002). President’s Message. Retrieved November 19, 2011, from www.dca.ca.gov/cba Sinason, D. (April 1, 2000). A Study of the Effects of Accountability and Engagement Risk on auditor Materially Decisions in Public Sector Audits. Journal of Public Budgeting, Accounting & Financial Management. Retrieved November 21, 2011, from All Business Website http://www.allbusiness.com/trends-events/audits/13480137-1.html Smith, K. Dr., Smith, L. Dr. (2009). Business and Accounting Ethics. Retrieved November 19, 2011, from http://acct.tamu.edu/smith/ethics/ethics.htm Wafield, B. (April 9, 2007). Fraud and Corruption- A Strategic Direction for Fiji. Retrieved November 20, 2011, from Article Alley Web site: http://www.articlealley.com/article_145803_15.html