According to Marshall (2004), “accounting is the process of identifying, measuring and reporting economic information about an organization for the purpose of making decisions and informed judgments” (p. 3). Specifically, financial accounting “refers to the process that results in the preparation and presentation of an entity's financial statements” (Marshall, McManus, & Viele, p. 5). While many entities prepare their own financial statements, businesses may also hire a public accounting firm or certified public accountant (CPA) to provide services such as reviewing or compiling statements . (A CPA is a professional designation granted by each state.) Entities that are publicly traded or complex in nature contract for auditing services. The audit service provider will test the entity's financial reporting for compliance with generally accepted accounting principles published by the Federal Accounting Standards Board (FASB). The provider 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 article briefly explains the principles of financial accounting and how the deviation from ethical and legal obligations has led to greater government oversight and the need for ethical training of future accounting professionals. Principles of Financial Accounting Since 1973, the FASB has been the private sector organization designated to establish financial accounting and reporting standards. Recognition by the SEC and the American Institute of Certified Publi...... middle of paper ......e accounting profession, and ethics training for accounting students would go a long way in creating ethical auditors. .ReferencesBean, DF and Bernardi, RA (2005). Accounting ethics course: a professional necessity, CPA Journal, 75(12), 64-65. Retrieved January 15, 2006 from Business Source Premier database. Financial Accounting Standards Board (2005). Fasb Facts. Retrieved January 16, 2006, from Facts about FASB website: http://www.fasb.org/facts/.Marshall, D., McManus, W., & Viele, D. (2004). Accounting, what do the numbers mean. 6th ed. New York: McGraw Hill Irwin. Ng, M. (January 2004). The future of standard setting. CPA Journal, 74(1), 18. Weinberg, J.A. (Summer 2003). Accounting for Business Behavior, Economic Quarterly--Federal Reserve Bank of Richmond, 89(3), 1. Retrieved January 15, 2006 from Proquest database..