Question

4. In the United States, what are the principles, concepts, rules, guidelines, methods, and procedures that govern financial reporting collectively referred to as?

5. Do all US companies have to use the rules referred to in Question #4 above? when preparing their financial statements? Why or why not?

6. Who has the legal authority to establish the rules referred to in Question #4 above? Has this organization made any of these rules? Why or why not?

7. Briefly describe the three primary US groups from the private sector that have been responsible for determining the rules referred to in question #4 above (include the years of operations for each group)

Answer 1

4.  Financial Accounting Standards Board (FASB)

5. Yes. All US companies have to use the rules when preparing their financial statements. As these rules are followed by the companies, financial information will be transparent, credible and understandable. The primary priority of the FASB is to integrate U.S. GAAP with the International Financial Reporting Standards (IFRS). This allows for more transparent and translatable financial practices internationally. Specifically, the FASB aims to address the differences in reporting between revenue recognition, leases, financial instruments and insurance.

6. The Securities and Exchange Commission. This organization delegated all of its responsibility to FASB, few important rules are lied by them. For Example: SEC-mandated Management Discussion and Analysis (MD&A) provides helpful information regarding past operating results and current financial position.

7. 1) Governmental Accounting Standards Board (GASB), formed in 1984

2) The Federal Accounting Standards Advisory Board (FASAB), formed in 1990.

3) International Financial Reporting Standards in the U.S. adopted in 2014