FASB   Since 1973, the Financial Accounting Standards Board has been the designated private-sector organization for establishing standards of financial accounting. As the primary standard setter in the area of financial reporting, the FASB sets Level A GAAP standards that govern the preparation of financial reports. The seven members of the Board are appointed to a full-time, five-year term, and are required to sever all connections with the firms or institutions they served prior to joining the Board. The FASB's standards are officially recognized as authoritative by the SEC's Financial Reporting Release Number 1 and the AICPA's Rule 203.

 

AcSEC   The Accounting Standards Executive Committee is the senior technical committee authorized to speak on behalf of the American Institute of CPAs when it comes to accounting matters. AcSEC sets Level B GAAP standards. The 15-member group works with the FASB, SEC, and International Accounting Standards Board. The accounting standards that AcSEC issues are prepared largely through the work of task forces composed of CPA volunteers, each having an AICPA staff member as liaison.

 

SEC   Established by the Securities Exchange Act of 1934 to restore investor confidence in the securities markets, the Securities and Exchange Commission is responsible for setting standards for all public companies in the U.S. The SEC has five Commissioners who are appointed by the President of the United States. Historically, the SEC's policy has been to rely on the private sector for the standard setting function so long as FASB fulfills its responsibility.

 

EITF   The Emerging Issues Task Force, an independent group formed by the FASB in 1984, is designed to include persons in a position to be aware of emerging issues before they become widespread and before divergent practices regarding them become entrenched. EITF members are drawn primarily from public accounting firms but also include representatives of large companies. If the group can reach a consensus on an issue, usually that consensus is taken by the FASB as an indication that no Board action is needed. A consensus is defined as an agreement, provided that no more than two of the thirteen voting members object. Consensus positions of the EITF are considered part of GAAP. If consensus is not possible, it may be an indication that action by the FASB is necessary.