What is the primary role of the Financial Accounting Standards Board (FASB)?

The primary role of the Financial Accounting Standards Board (FASB) is to set accounting standards in the United States. This organization is responsible for establishing the Generally Accepted Accounting Principles (GAAP) that govern financial reporting and ensure transparency and consistency in the preparation of financial statements. By setting these standards, FASB helps maintain the integrity of financial information, which is crucial for investors, creditors, and other stakeholders who rely on accurate financial reporting to make informed decisions.

FASB operates independently and works to enhance the usefulness of financial reporting by promoting standards that are relevant and provide reliable information. Their standards impact how businesses report their financial performance and position, which ultimately influences the economy at large.

Other choices involve functions not covered by FASB. For instance, regulating stock market transactions is typically the responsibility of entities like the Securities and Exchange Commission (SEC). Auditing financial statements is performed by independent auditors who assess the accuracy and fairness of those statements rather than setting the standards themselves. Issuing tax guidelines usually falls under the jurisdiction of the Internal Revenue Service (IRS) and tax authorities, not FASB. Therefore, the choice regarding the setting of accounting standards is the one that correctly identifies the primary role of FASB.