Principles of Revenue Recognition
Revenue is reported on the top line of the income statement. Accrual accounting... Read More
Standard-setting bodies and regulatory authorities play an integral role in capital market development and supervision.
Examples of standard-setting bodies are the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB). The IASB is the standard-setting body that is responsible for issuing the international financial reporting standards. The FASB issues the US generally accepted accounting principles (GAAP).
An example of regulatory authority is the US Securities and Exchange Commission whose primary responsibility is the regulation of securities and capital markets in the United States.
Standard-setting bodies establish financial reporting standards and are typically private sector, not-for-profit, self-regulated organizations that have boards comprised mostly of experienced accountants, auditors, academics, and users of financial statements.
Regulatory authorities, on the other hand, recognize and enforce standards. They possess the legal authority to enforce financial reporting requirements as well as to supervise capital market participants.
Several attributes are considered desirable for all standard setters. These include the following:
Question
Which of the following is least likely a desirable attribute of a standard-setting body?
- The decision setting process for the standard-setting body should not be influenced by self-interest.
- The responsibilities of all the parties involved in the standards-setting process do not have to be clearly defined.
- The accounting standards board should be guided by a well-articulated framework that has a clearly stated objective.
Solution
The correct answer is B.
The responsibilities of all the parties involved in the standards-setting process should be clearly defined. The other two statements are correct.