Wednesday, February 19, 2014

Financial Accounting Standards Hierarchy

As an accounting student it can be very difficult to remember all the professional organizations that play a major role in standard setting, organizing, and implementing  of accounting rules and regulations. American standard setting organizations differ from International standard setting organizations which cause confusion and also it becomes hard to remember which organization takes precedence over which.





  • The Securities Exchange Commission was established to monitor the stock market after the great depression. One of its responsibilities was to establish United States Generally Accepted Accounting Standards.

    • Financial Accounting Standards Board (FASB) was established in 1973, it is predominantly responsible in issuing Generally Accepted Accounting Principles. The financial accounting standards board issues statements of financial accounting standards (SFAC) which dictate financial accounting rules and regulations.

      • United States Generally Accepted Accounting Principles (US GAAP) are a set of commonly accepted accounting standards implemented within the United States. FASB and IASB are currently under a convergence of both international and American accounting standards.

    • Governmental Accounting Standards Board (GASB) is the governmental counterpart of Financial Accounting Standards Board (FASB). It establishes the accounting and reporting rules and regulations for governmental entities.

      • GASB standards are strictly for governmental entities such as towns, cities, and the federal government. These standards do not apply for not for profit entities. Not for profit entities refer to financial accounting standards board (FASB) regarding financial accounting and reporting issues.

  • The International Financial Reporting Standards Foundation is headquartered in London. Its main objective is to promote and develop International Financial Reporting Standards (IFRS).

    • The International Accounting Standards Board (IASB) is responsible for developing the international financial reporting statements (IFRS). It replaced the International Accounting Standards Committee (IASC). The purpose behind the formation of the IASB is to develop a single set of financial accounting and reporting standards implemented internationally.

      • International Financial Reporting Standards are standards that are globally accepted by over 90 countries and counting. These standards differ from United States Generally Accepted Accounting Principles (US GAAP).

  • The International Financial Reporting Interpretation Committee (IFRIC) was established by the IFRS Foundation to replace the Standing Interpretations Committee (SIC). The main goal behind this committee is to assist the IASB address issues not discussed within IFRS as well assist in reaching International Convergence of accounting standards between US GAAP and IFRS.