What Type of Oversight is there for Practicing Accountants?

Due to the sensitive financial nature of their work, there is considerable oversight of practicing accountants. Innocent mistakes can cause serious financial and legal consequences, and oversight is also important to prevent fraud. The following are some of the most important bodies that oversee professional accountants.

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Company Policies

For most accountants, their employers provide the first level of oversight into their performance. There are a number of different policies private corporations and non-profits can put in place to ensure accountants are utilizing best practices and not participating in fraud. This can include having multiple accounting employees check each other’s work, training financial employees in best accounting practices, running routine audits with independent auditors and more. Companies want to protect themselves against fraud and inaccurate financial reporting, so accountants with suggestions for how to improve policy should speak out. Accountants should also obey all company policies to ensure avoidable mistakes are not made that could put their jobs in jeopardy.

Professional Organizations And State Boards

Professional organizations also maintain some level of oversight over practicing accountants. To remain, members of these organizations, access their benefits and take advantage of their reputations, accountants must remain in good standing. Practicing accountants who hold a CPA designation must maintain their licensure in order to practice as well. CPAs enjoy higher prestige and are the only accountants allowed to file reports with the Securities and Exchange Commission (SEC) per the Bureau of Labor Statistics. CPA license requirements will vary by state but usually stipulate continuing education as a requirement and all must pass the national American Institute of Certified Public Accountants (AICPA) exam.

The IRS (And State Revenue Departments)

Federal and state financial organizations are other major overseeing bodies for accountants. These include the IRS, the Federal Trade Commission, the SEC and various state revenue departments. Practicing accountants must work closely with these organizations to ensure all financial documents and tax information is filed correctly. These groups occasionally do audits of finances if something seems off or they simply decide to do one at random. Any issues found must be corrected. These organizations offer resources for accountants on how they function. They also hire accountants directly to work for them.

Law Enforcement

Law enforcement also serves as a type of oversight of practicing accountants, especially in particularly unwelcome scenarios. Certain financial activities such as money laundering and embezzlement are criminal and therefore are the jurisdiction of relevant law enforcement. These cases can be overseen by different levels of law enforcement depending on the scope of the problem. In some instances, local police are sufficient. In others, state Attorney General offices and even the Federal Bureau of Investigations (FBI) may be involved if the activity is occurring throughout a state or across state lines. Most organizations will want to deal with suspected theft internally at first, but reporting the incident to law enforcement may become necessary as well. Accountants should be careful to follow all relevant laws and not, accidentally or purposefully, put themselves in a bad position.

Practicing accountants are held to a number of important standards from different sources. These standards are necessary to preserve the integrity of the profession and ensure best practices are used. Proper oversight of practicing accountants is necessary to ensure critical financial matters are handled correctly.