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In: Accounting

Room for DebateDebate 1-1 Which Body Should Set Accounting Standards in the United States? Team Debate:...

Room for DebateDebate 1-1

Which Body Should Set Accounting Standards in the United States?

Team Debate:

Team 1:Argue that the SEC should set accounting standards in the United States.

Team 2:Argue that the FASB should set accounting standards in the United States.

Solutions

Expert Solution

Before proceeding further, Firstly we should know what these bodies do:

SEC- It is security and exchange commission that was created in 1934 after the great depression of 1929. It is the regulator of stock market and it protects investors' rights.

FASB- It is financial accounting standard board that makes the "Generally accepted accounting principles" (GAAP). It was formed in 1973. It is a private, not for profit organization that creates financial reporting standards.

In my views, FASB should set the accounting standard because it has been formed for that purpose only. It establishes GAAP and instructs the companies about preparing financial statements and reports. FASB has a unique and distinct position in financial reporting process. It tells companies how to improve the financial methods for better and efficient financial reporting that is free from fraud and error. FASB take recommendations from SEC and American investors protection act (AIPA). FASB makes the business able to present fair and transparent financial reporting so that investors and creditors can take informed decision.

SEC is the regulator of stock market and works for safeguard of investors in the stock market. SEC's task is totally different from that of FASB so SEC cannot set accounting standards in USA. SEC is a legal body, it can levy penalty and fine if rules are broken. SEC makes sure the fair and efficient market for investors so that investors' trust can be maintained.

ekkarill92 answered 7 months ago
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