Ethical and Legal ObligationsEthical and legal obligations apply to all members of society. As an individual in society, the obligation to act in an ethical and law-abiding manner on a daily basis is vital to the integrity of daily life. Many professions have their own code of ethics. Financial reporting is not exempt from these ethical and legal standards. A person's dynamism depends on the decisions made in the business world. Business transactions are carried out on a daily basis and can impact a person's economic stability. Trust is placed in the hands of American businesses and the requirement of financial reporting to reveal a complete, honest and legal picture of an entity's accounting practices is important to achieving trust. This article will discuss the obligations of legal and ethical standards of practice in the financial field. According to Marshall, McManus, and Viele (2004), accounting is “the process of identifying, measuring, and reporting information about a business for the purpose of making informed decisions and judgments” (p.3). Decision makers look at balance sheets, income statements, changes in equity, and the cash flow statement as documentation of an entity's viability. A false statement in financial statements can cast doubt on the profitability of any business. The need for accountability and regulation of accounting practices is important to preserve trust in the business world. Entities have ethical and legal obligations regarding financial reporting. To ensure compliance with these obligations, agencies were created to regulate standards of practice. The ...... middle of document ...... rtheeast Business & Economics Association, p.360-366. Retrieved October 19, 2008 from EBSCOhost database. Financial Accounting Standards Board. (2008). FASB Facts. Retrieved October 17, 2008 from http://www.fasb.org/facts/Marshall, DH, McManus, WW and Viele, DF (2004). Accounting: What the Numbers Mean (6th ed.). New York: McGraw-Hill. Accounting Oversight Council for Public Companies. (2008). Our mission. Retrieved October 17, 2008 from http://www.pcaobus.org/index.aspxU.S. Security and Exchange Commission. (2008). The Investor Advocate: How the SEC protects investors, maintains market integrity, and facilitates capital formation. Retrieved October 17, 2008 from http://www.sec.gov/about/whatwedo.shtml