Study Unit 1: Financial Accounting Standards

Question 1

Congress empowered which of the following bodies with the authority to set accounting standards for publicly traded companies in the U.S?

A) The Securities & Exchange Commission (SEC)

B) The American Institute of Certified Public Accountants (AICPA)

C) The Financial Accounting Standards Board (FASB)

D) The International Accounting Standards Board (IASB)

Answer 1

A) The Securities & Exchange Commission (SEC)

Question 2

What Authority has Congress given the Securities & Exchange Commission (SEC)?

Answer 2

Congress has empowered the SEC to:

1) establish principles for financial reporting by publicly traded companies, known as issuers, in the United States.
2) SEC can delegate the Financial Accounting Board (FASB), to establish accounting principles (GAAP) for US businesses, while they enforced those established principles.
3) they can investigate possible violations of securities laws and prosecute the offenders in federal court.