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.