Which body provides authoritative support for accounting standards in the U.S.?

The Financial Accounting Standards Board (FASB) is the primary body responsible for establishing and improving financial accounting and reporting standards in the United States. This organization is tasked with creating Generally Accepted Accounting Principles (GAAP), which serve as the framework for financial reporting.

FASB standards help ensure that financial statements provide consistent, comparable, and transparent information, which is crucial for investors, creditors, and other stakeholders in making informed decisions. The body works to address emerging accounting issues and develops comprehensive principles that entities must follow, guiding the overall accounting practices in the U.S.

In contrast, while the American Institute of Certified Public Accountants (AICPA) contributes to the field through professional guidance and educational resources for accountants, it does not directly set accounting standards like FASB does. The U.S. Securities and Exchange Commission (SEC) oversees the securities markets and requires companies to adhere to FASB standards but does not create those standards itself. International Financial Reporting Standards (IFRS), on the other hand, are developed by the International Accounting Standards Board (IASB) and are not authoritative for U.S. firms unless they choose to follow them.

This differentiation highlights the FASB’s critical role in shaping accounting standards in the U.S