Wiley- FASB and Standard Setting Flashcards

1
Q

What is the main purpose of the Securities and Exchange Commission (SEC)?

A

The main purpose of the SEC is to promote efficient allocation of capital by maintaining
open, orderly, and fair securities markets.

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2
Q

What comprises United States generally accepted accounting principles (GAAP)?

A

The Financial Accounting Standards Board (FASB) Accounting Standards Codification
comprise authoritative U.S. GAAP for publicly traded companies. Securities and Exchange
Commission (SEC) pronouncements are also GAAP.

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3
Q

What is the role of the Financial Accounting Foundation (FAF)?

A

The FAF exercises oversight of the Financial Accounting Standards Board (FASB), appoints
the members of the FASB, and ensures funding.

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4
Q

What is the Financial Accounting Standards Board (FASB)?

A

The FASB establishes financial accounting standards for business entities.

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5
Q

What is the role of the Financial Accounting Advisory Council (FASAC)?

A

The FASAC provides guidance on major policy issues, project priorities, and the formation of
task forces.

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6
Q

What are the first three steps the Financial Accounting Standards Board (FASB) uses when
issuing a new accounting standard?

A
  1. Considers whether to add a project to its agenda in consultation with the Financial
    Accounting Foundation (FAF).
  2. Conducts research.
  3. Holds a public hearing on the topic.
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7
Q

What are the final three steps in the standard-setting process?

A
  1. Evaluate research and comments from interested parties and issue an exposure draft.
  2. Solicit additional comments.
  3. Finalize new accounting guidance and issue Accounting Standards Updates (ASUs).
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8
Q

How do user groups influence the outcome of the Financial Accounting Standards Board
(FASB) standards?

A

Users influence standards by providing input during the due process procedure.

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9
Q

What is the American Institute of Certified Public Accountants (AICPA)?

A

The AICPA is the professional organization for participating CPAs.

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10
Q

What does the Securities and Exchange Commission (SEC) do?

A

It administers the U.S. securities laws, most notably the Securities Act of 1933 and the
Securities Exchange Act of 1934 as well as others.

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