According to Marshall (2004), "accounting is the process of identifying, measuring and communicating economic information about an organization for the purpose of making informed decisions and judgments" (p. 3). Specifically, financial accounting “refers to the process of preparing and reporting an entity's financial statements” (Marshall, McManus, & Viele, p. 5). While many entities prepare their own financial statements, businesses may also contract with a public accounting firm or certified public accountant (CPA) to perform services such as auditing or filing returns. (A CPA is a professional designation granted by individual states.) Publicly traded or complex entities that contract for audit services. The audit provider will review the entity's financial reporting for compliance with generally accepted accounting principles issued by the Federal Accounting Standards Board (FASB). The supplier will also ensure that the company, if publicly traded, complies with the requirements of the Securities and Exchange Commission (SEC) and the regulations of the Public Company Accounting Oversight Board (PCOAB). This paper briefly explains the principles of financial accounting and how deviation from ethical and legal obligations has led to increased government oversight and the need for ethical training of future accounting professionals. Financial Accounting Standards Since 1973, the FASB has been the private sector organization designated to establish financial accounting and reporting standards. Giving authority to its designation is recognition by the SEC and the American Institute of Certified Publi...... middle of paper ...... the accounting profession, and ethics training for accounting students would go a long way toward creating ethical auditors .ReferencesBean, DF, & Bernardi, RA (2005). Accounting ethics courses: a professional necessity, CPA Journal, 75(12), 64-65. Retrieved January 15, 2006, from Business Source Premier database. Financial Accounting Standards Board, (2005). Facts about Fasb. Retrieved January 16, 2006, from Facts about FASB website: http://www.fasb.org/facts/.Marshall, D., McManus, W., & Viele, D. (2004). Accounting, what the numbers mean. 6th ed. New York: McGraw Hill Irwin.Ng, M. (2004, January). The future of standard setting. CPA Journal, 74(1), 18.Weinberg, J. A. (2003, Summer). Accounting for Corporate Behavior, Economic Quarterly--Federal Reserve Bank of Richmond, 89(3), 1. Retrieved January 15, 2006, from the Proquest database.