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REGULATION OF ACCOUNTING STANDARDS IN THE UNITED STATES 1  As indicated in an earlier case, the SEC is the federal regulatory agency with Congressional authority to regulate the financial accounting standards used by and financial disclosures made by publicly traded companies in the United States. Although Congress granted the SEC this authority and responsibility, the SEC works closely with many other institutions including the Financial Accounting Standards Board (FASB). The FASB states its mission is “to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information.” 2 The FASB, in its mission statement, goes on to state: Our financial reporting system is essential to the efficient functioning of the economy. That is because it is the means by which investors, creditors, and others receive the credible, transparent, and comparable financial information they rely on to make sound investment and credit decisions. Accounting standards are an important element of the financial reporting system because they govern the minimum required content of financial statements of U.S. public companies. To accomplish its mission, the FASB acts to: Improve the usefulness of financial reporting by focusing on the primary characteristics of relevance and reliability and on the qualities of comparability and consistency; Keep standards current to reflect changes in methods of doing business and changes in the economic environment; Consider promptly any significant areas of deficiency in financial reporting that might be addressed through the standard-setting process; Promote the international convergence of accounting standards concurrent with improving the quality of financial reporting; and
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This note was uploaded on 07/30/2011 for the course ACCT 560 taught by Professor Chandler during the Summer '11 term at University of Illinois, Urbana Champaign.

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