Question

What role has the Securities and Exchange Commission played in setting accounting standards? Contrast its role with that played by the Financial Accounting Standards Board.

Answer 1

The SEC or Securities and Exchange Commission is mainly concerned with protecting the interest of the one who are investing. It helps in maintaining the market efficiency. It also helps companies to raise capital. It keeps an eye on how the companies are carrying their reporting process. If it finds any type of fraud been conducted, it has all the rights to charge fine on companies.

SEC has authority to frame rules for preparing financial statements for companies. These are the companies whose stocks are being traded. It usually delegates its powers to the private sectors to set standards but wherever it finds need to make amendments or change the respective changes are made by SEC.

When it's role is contrasted with that of Financial Accounting Standards Board, Securities and Exchange Commission is concerned with the regulation of financial disclosures and the trading operations that to of public companies. Whereas FASB is concerned with reporting of these finances or their financial reporting as when they are being delegated by SEC. These are the private sector organizations which are involved in setting standard for financial reporting in companies.