Accounting Regulatory Agencies

1280 Words6 Pages
ACCOUNTING REGULATORY AGENCIES

Introduction

Accounting standards are needed so that financial statements will fairly and consistently describe financial performance. Without standards, users of financial statements would need to learn the accounting rules of each company, and comparisons between companies would be difficult. Numerous accounting bodies govern the accounting environment and accommodate the success of a business. The four main financial governing bodies include the following: • Securities and Exchange Commission (SEC) • Financial Accounting Standards Board (FASB) • Governmental Accounting Standards Board (GASB) • International Accounting Standards Board (IASB)
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While the GASB has jurisdiction over financial reporting by governmental entities, the FASB establishes rules for private sector accounting. Both boards are independent, nongovernmental bodies whose members are appointed by the trustees of the Financial Accounting Foundation (FAF). Before issuing its standards, the GASB follows the set of “due process” activities enumerated in its published rules of procedure. Due process is stringent and is designed to permit a thorough and open study of financial accounting and reporting issues by the preparers, auditors, and users of financial reports, in order to encourage broad public participation in the standards setting process. Significant steps in the process are announced publicly. The GASB’s meetings are open to public observation and a public record is maintained. One difference between the two organizations is that the rules of the GASB need not apply to that of FASB. If the GASB had not covered an accounting topic that the FASB had, then the FASB standards would be used by the government entities. This sets up kind of like a default so that there are not so many different rules and possibly double standards. The GASB and the FASB both have the authority to create rules, with the GASB having the ability
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