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 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 accurate and reliable financial …