fiduciary responsibility

Examples of fiduciary responsibility in the following topics:

• Ethical Considerations

  • If a company's purpose is to maximize shareholder returns, then sacrificing profits to other concerns is a violation of its fiduciary responsibility.
  • Ethical issues include the rights and duties between a company and its employees, suppliers, customers and neighbors, and the company's fiduciary responsibility to its shareholders.
  • For example, in response to a number of major corporate and accounting scandals -- including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom -- the Sarbanes-Oxley Act (SOX) of 2002 was put into place.
  • SOX -- also known as the "Public Company Accounting Reform and Investor Protection Act" in the Senate and "Corporate and Auditing Accountability and Responsibility Act" in the House -- is a United States Federal law that set new or enhanced standards for all U.S. public company boards, management and public accounting firms.
  • The act contains 11 titles, or sections, ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the law.

• Cash Controls

  • Who is responsible for receiving and depositing cash?
  • Who is responsible for giving cash to settle debts?
  • Examples of control activities include having different employees being responsible for different parts of the transaction.
  • The entire process must be reviewed by upper level management to ensure that every person is complying with their responsibilities.

• Defining Current Liabilities

  • A duty or responsibility to others that entails settlement by future transfer or use of assets, provision of services, or other transaction yielding an economic benefit, at a specified date, on occurrence of a specified event, or on demand.
  • A duty or responsibility that obligates the entity to another entity, with no option to avoid settlement.

• Defining Liabilities

  • A duty or responsibility to others that entails settlement by future transfer or use of assets, provision of services, or other transaction yielding an economic benefit due at a specified or determinable date, on occurrence of a specified event, or on demand.
  • A duty or responsibility that obligates the entity to another, leaving it little or no discretion to avoid settlement.

• Terminology of Accounting

  • A responsibility to others that entails settlement by future transfer of assets, provision of services, or other transactions,
  • A responsibility that obligates the entity to another, leaving it little or no discretion to avoid settlement, or

• Reasons for a Conceptual Framework

  • Prior to 1929, no group—public or private—was responsible for accounting standards.
  • The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S.

• Being Aware of Off-Balance-Sheet Financing

  • However, the primary distinction between on and off-balance sheet items is whether or not the company owns, or is legally responsible for the debt.

• Standard-Setting Groups: SEC, AICPA, and FASB

  • Securities and Exchange Commission (SEC) is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States.
  • Currently, the SEC is responsible for administering seven major laws that govern the securities industry:

• Inputs to Accounting

  • A bookkeeper is usually responsible for writing the "daybooks. " The daybooks consist of purchases, sales, receipts, and payments.
  • The bookkeeper is responsible for ensuring all transactions are recorded in the correct day book, suppliers ledger, customer ledger, and general ledger.

• Reconciling Cash Accounts and Bank Statements

  • When that occurs, the person responsible for the business's books must record the transaction using a journal entry.