Describe the role of the SEC in society and discuss its relationship with and influence on the practice of auditing.

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Part $1$

The purpose of the Securities and Exchange Commission$($SEC$)$ is to assist in providing investors$$

with reliable information upon which to make investment decisions.

Since most

reasonably large CPA firms

have clients that must file reports with the SEC each year$($all companies filing registration statements under the securities acts of $1933$ and $1934$ must file

audited financial statements

and other reports with the SEC

at least once each year$)$

$,$ the profession is highly involved with the SEC requirements.

Part $2$

The SEC has considerable influence in setting

generally accepted accounting principles

and disclosure requirements for financial statements because of its authority for specifying reporting requirements considered necessary for fair disclosure to investors. In$$ addition, the SEC has power to establish rules for any CPA associated with audited financial statements submitted to the Commission.