In the United States, there are various regulating bodies, which oversee the financial reporting of profit and non-profit organizations. If we are speaking about those companies that openly trade their stocks, the most important regulating body will be Securities and Exchange Commission or SEC. This governmental institution ensures that the companies provide accurate and timely information about their financial information to investors.
Other companies are more likely to be affected by Internal Revenue Service. Certainly, both profit and non-for-profit organizations have to submit accurate financial statements. Yet, they do not have to comply with the regulations of all governing bodies. For example, non-for-profit organizations are practically unaffected by Securities and Exchange Commission.
The thing is that these organizations have different goals and responsibilities to the stakeholders. Yet, the distinction between profit and not-for-profit is not always clear. For instance, there are many organizations, which receive financial endowments, yet, they also require payment for their services. In this case, one can speak about medical and educational institutions. Overall, companies adopt several strategies in order to comply with the regulations. For instance, it is possible to mention internal and external audit, bank reconciliation, and review of financial transactions.
My company mostly relies on external and internal audit in order to comply with existing rules of accounting. In order to streamline the regulatory process, the governmental agencies as well legislators should develop regulations that will clearly distinguish profit and non-for-profit organizations and establish the accounting rules, which they should follow.
