Accounting Paper 1

While there are a variety of organizations involved in accounting rule-making, each organization plays a different role in setting accounting rules and standards. If Beverly does a bit of research, she would be able to find the purpose of each of these authoritative organizations. There are three major parties involved in setting the standards of accounting.

The first of these major organizations is the Securities and Exchange Commission (SEC). This group was established by the federal government and acts as the enforcement authority and oversee that all set accounting standards are followed. This means that all public companies are required to adhere to the Generally Accepted Accounting Principles.

The second major organization that assists with accounting rule-making is the American Institute of CPAs (AICPA). This group is a national professional organization of certified public accountants. This organization had gone through many changes and developments since its establishment in 1939. The Institute has consisted of various committees and boards since 1939 which contribute to the Generally Accepted Accounting Principles. It started as the Committee on Accounting Procedures. In 1959, the structure was changed to the Accounting Principles Board.

The final major organization that contributes to accounting rule-making is the Financial Accounting Standards Board (FASB). The overall objective of this group is to establish and improve standards of financial accounting and reporting. The FASB is a small group consisting of only seven members. Each member is employed only as a member of the FASB, and has no ties to other private firms. The FASB guides and educates the public on the use of financial information.

Authoritative support is any support received from any authoritative accounting body. These are the major organizations that contribute directly to maintaining and updating the Generally Accepted Accounting Principles. Because the FASB sets...