Securities Exchange Commission (FASB) And The American Institute Of Certified Public Accountants

The Securities Exchange Commission (SEC), Financial Accounting Standards Board (FASB), and the American Institute of Certified Public Accountants (AICPA) all have an interesting relationship with each other. The SEC has the legal authority to the set standards of accounting in the United States, but has delegated that authority to the FASB. And the American Institute of Certified Public Accountants dictates the conduct of certified public accounts that practices their profession utilizing the laws and principles formed by the Securities Exchange Commission and Financial Accounting Standards Board. Organizations use these three authorities often to present to third parties their financial information. Accountants prepare financial statements in accordance with GAAP,

As the United States’ stock market crashed, so did the American public’s trust. “Investors large and small, as well as the banks who had loaned to them, lost great sums of money in the ensuing Great Depression.” (www.sec.gov). In order to revive the market and American’s confidence, Congress passed the Securities Act of 1933, the Securities Exchange of 1934, and ultimately formed the Securities Exchange Commission. This piece of legislation was the first of many to prevent fraudulent activities, provide third parties accurate financial information, monitor the market, and create rules and regulations for trading. (www.sec.gov). The SEC has five commissioners that are appointed by the president of the United States. The President also delegates one of the five commissioners as Chairman of the commission. The SEC is further broken down into five divisions and twenty-three offices; all of which work together to facilitate capital formation while enforcing laws, and protecting investors. The SEC also works with other agencies like congress, the stock exchange, Federal Reserve, and the Financial Accounting Standards