Question

Does the SEC have more authority or less authority than the FASB with respect to standard...

Does the SEC have more authority or less authority than the FASB with respect to standard setting? Explain the relationship between the SEC and the FASB. Can you think of any reasons why the SEC relies on private sector bodies to set accounting standards rather than undertaking the task itself?

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Answer #1

The SEC has more power over FASB with respect to standard setting. SEC is a governmental agency responsible for setting accounting standard whereas FASB is a private body to whom SEC has delegated this authority. The SEC has created FASB to set the accounting standards.

FASB acts as an independent body that creates financial reporting standards for public and governmental organizations. The main reason for SEC to rely on a private body like FASB was that it has more flexibility to complete tasks faster and it would be more transparent & independent in its approach. The private sector attracts and retains more qualified personnel.

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