Standard Setting Bodies and US GAAP vs

US GAAP Standard Setting Bodies and Hierarchy

• The Securities and Exchange Commission (SEC) has the authority to establish US GAAP and has historically delegated this responsibility to the accounting profession.
• The SEC was established in 1934 by the Securities Exchange Act and its rules and regulations apply to all companies issuing securities in the US.
• SEC pronouncements include Regulation S-K, Regulation S-X, Financial Reporting Releases (FRR), Accounting Series Releases (ASR), Interpretative Releases (IR), Staff Accounting Bulletins (SAB), and EITF Topic D and SEC Observer comments.
• The SEC has determined GAAP along with three different accounting bodies since 1934, including CAP, APB, and FASB.
• CAP (Committee on Accounting Procedures) was a part-time committee of the AICPA that issued AICPA Accounting Research Bulletins and determined US GAAP from 1939-59.
• APB (Accounting Principles Board) was established to develop an overall conceptual framework for accounting principles and issued opinions and interpretations to improve financial accounting and reporting standards.
• FASB (Financial Accounting Standards Board) is the current standard-setting body for US GAAP, established in 1973.
• The hierarchy of US GAAP includes authoritative standards issued by standard-setting bodies and other accounting literature.
• International Financial Reporting Standards (IFRS) is another set of accounting standards used globally.
• The SEC allows foreign private issuers to use IFRS for financial reporting without reconciliation to US GAAP.
• IFRS is issued by the International Accounting Standards Board (IASB).
• The SEC has expressed support for a single set of high-quality, globally accepted accounting standards.

Test your knowledge of standard setting bodies and the hierarchy of US GAAP and IFRS with this quiz. Learn about the role of the SEC (Securities and Exchange Commission) in establishing US GAAP and its historical delegation of responsibility to the accounting profession.