2.

1 The Stockholders The expectation is that it will instill

confidence in investors with regard to the
Report accuracy of the audited financial
Every corporation has many and varied statements of public companies.
uses for the standardized records and Publicly owned corporations with more
reports of its financial activities. than $5 million in assets and 500 or
Periodically, reports must be prepared for more stockholders1 are required by the
regulators, Securities and Exchange Commission
creditors (lenders), owners, and (SEC)the federal regulatory body that
management. The guidelines used to governs the sale and listing of securities
prepare to provide their stockholders with an
and maintain financial records and reports annual stockholders report. The
are known as generally accepted stockholders report summarizes and
accounting principles (GAAP). These documents the firms financial activities
accounting practices and procedures during the past year. It begins with a letter
are authorized by the accounting to the stockholders from the firms
professions rule-setting body, the president and/or chairman of the board
Financial
Accounting Standards Board (FASB).
In addition, the Sarbanes-Oxley Act of
2002, enacted in an effort to eliminate
the many disclosure and conflict of
interest problems of corporations,
established the Public Company
Accounting Oversight Board (PCAOB),
a notfor-
profit corporation that oversees auditors of
public corporations. The PCAOB
is charged with protecting the interests of
investors and furthering the public
interest in the preparation of informative, TTTTTTTTTTTTTTTTTTTTT
fair, and independent audit reports.