Running Head: ACCOUNTING STANDARDS

Accounting Standards Name Institution Professor Course Date

ACCOUNTING STANDARDS Accounting Standards Details Compare and contrast the process of accounting standard setting and financial presentation between these regulatory agencies Securities and Exchange Commission (SEC) Security Exchange Commission represents federal accounting agency that enforces applicable federal securities laws. The agency requires specific companies for instance, public business entities to comply with accounting guidelines known as Generally Accepted Accounting Principles (GAAP). The guidelines perform the crucial role in defining the types of accounting public business entities should adopt in the transaction of business in respective markets and industries. Security and Exchange Commission also provides a clear definition of

fair accounting practices. This is possible through adoption of contemporary accounting practices to curb the changing values and cultures of the modern business entities. Security and Exchange Commission also develops strong accounting practices in the form of associating with other accounting agencies such as Financial Accounting Standard Board (FASB). This association is crucial to the development of laws and accounting practices (Siegel, 2000). The strength of Security and Exchange lies in its capacity to set new laws to promote fairness in relation to accounting practices. Securities and Exchange Commission represents one of the agencies under the jurisdiction of the congress to regulate security market and offer valid protection of investors. Apart from offering protection and regulation of the security market, SEC monitors takeovers of business entities and corporations in the United States of America. The security and exchange commission comprises of five commissioners usually appointees of the president of the United States of America. Five commissioners undergo verification by the

ACCOUNTING STANDARDS senate after appointments by the president. SEC promotes public disclosure in full essence and offers protection to investments against frauds and manipulation within the security markets. SEC ensures that activities within the security market in the form of mails, interstate commerce, and internet services are registered under contemporary regulations in relation to accounting practices (Siegel, 2000). Financial Accounting Standards Board (FASB) This is a board independently consisting of seven accounting professionals. These

professionals define and communicate standards of financial accounting and practices within the United States of America. Financial Accounting Standards Board operates on standards known as the generally accepted accounting principles (GAAP). FASB regulates preparations of financial reports of relevant business entities. FASB is also crucial to offering guidance to other accounting standards such as SEC (Comiskey & Mulford, 2000). In this relation, Financial Accounting Standards Board is authoritative in the provision of accounting statements and practices. The strength of the Financial Accounting Standards Board lies in its efforts to promote efficiency and transparency within the market. FASB aims to promote developments in the accounting practices of business entities. This is through enhancement of guidelines to regulate accounting reports, identification of challenges and provision of timely resolutions to the problems. Financial Accounting Standards Board also promotes the creation of uniform standards within the financial market. SEC focuses on accounting practices within the security market while FASB promotes accounting standards within the financial market. Financial Accounting Standards Board offers credible flexibility to numerous business entities seeking to present

ACCOUNTING STANDARDS accurate and reliable financial statements. This is an indication that the accounting practices of the Financial Accounting Standards Board simplify complex accounting models for easier understanding and implementation within the market. Financial Accounting Standards Board also offers numerous ways to present and report financial statements within the market and relevant industries. The shortcoming of Financial Accounting Standards Board is in relation to flexibility of the agency (Comiskey & Mulford, 2000). Since each business entity has the capacity to present its own financial statement in the form of preference, it is likely that accounting would be different in the form of reporting and expression. International Accounting Standards Board (IASB) The International Accounting Standards Board represents an independent body (private sector) that performs the role of developing and approving International Financial Reporting Standards. The International Accounting Standards Board performs its roles and responsibilities under the watch of the International Financial Reporting Standard Foundation. International Accounting Standards Board came in to operation by 2001 with the objective of replacing International Accounting Standards Committee. The bodies consist of 16 accounting professionals. The International Accounting Standards Board performs three crucial roles: discretion in developments and the pursuit of technical agenda, preparation and issuance of IFRS, and approval and provision of interpretations under the development of IFRS committee for interpretations. International Accounting Standards Board enjoys a high degree of flexibility in the implementation of its principles and standards. International Accounting Standards Board is also not accepted universally thus accurate and reliable implementation in the context of business entities (Albrecht et al, 2011).

ACCOUNTING STANDARDS Governmental Accounting Standards Board (GASB) Governmental Accounting Standards Board represents an organization that aims to

improve and develop accounting reporting standards. This is also known as adoption of generally accepted accounting principles. The principles make it easier for corporate to understand and apply financial records in relation to both state and local governments. The Governmental Accounting Standards Board operates under the watch of Financial Accounting Foundation (FAF). One of the weakest points of Governmental Accounting Standards Board is the lack of capacity to offer directions of the federal government reports. States and local governments subscribe to the standards and principles of the Governmental Accounting Standards Board while the federal government reports in relation to principles of the Federal Accounting Standards Board. The strength of the Governmental Accounting Standards Board is that it promotes the adoption of generally accepted accounting principles in governing states and local government financial reports (Carmichael, 2007).

ACCOUNTING STANDARDS References Comiskey, E. E., & Mulford, C. W. (2000). Guide to financial reporting and analysis. New York: John Wiley and Sons Ltd. Siegel, J. G., & Shim, J. K. (2000). Accounting handbook. Hauppauge, N.Y: Barron's. Albrecht, W. S., Stice, E. K., & Stice, J. D. (2011). Financial accounting. Mason, OH: SouthWestern/Cengage Learning. Carmichael, D. R., Whittington, R., & Graham, L. (2007). Accountants' handbook: Vol. 2. Hoboken, N.J: Wiley.