Sec, Fasb and Interest Group

ACCG835

International Accounting

Session 2, 2012

GROUP 3: TAM THANH TA (42732530)

YUANYUAN MA (42363330)

ANGGA MAULANA SODIKIN (42418801)

HIU LAM FAN (43030602)

Introduction

Set and implement of accounting standard setting are important to different parties, such as government, private corporations and investors, due to the direct influence on their financial performance (Newman, T, 1981). Therefore, it is important to find out the interest groups which affect standard setting in the United States (U.S). As Choi and Meek (2011) mentioned, the financial accounting system in U.S is “regulated by a private-sector (FASB), but a government agency (SEC) underpins the authority of its standard”. Initially, this report briefly outlines two major institutions, which are SEC and FASB, and their missions that influence U.S accounting standard setting. Furthermore, this report identifies several interest groups influence SEC and FASB, by divided them into four parts, which are preparers, users, attestors and lobbying groups. Moreover, an analysis for the most powerful interest groups to SEC and FASB with given examples are provided in this report.

I. Simple descriptions of SEC&FASB

1. The SEC

Previously, trading conducts were regulated by a formal exchange system considered fairly. However, participants in the markets did not obey the rules neither in trading nor in discoursing information as weak statutory enforcement. Underwent a depressed period in the earlier 1900s, the U.S government found the Securities and Exchange Commission (SEC) in 1934.

The SEC is generally defined as an authoritative and effective federal regulatory agency aims to protect investors as well as maintain fairer order in the stock markets (Phillips & Zecher 1982, pp. 5-6). According to Phillips and Zecher (1982, p.7), the governmental oversight mainly influence in...