{"id":3604,"date":"2019-10-08T13:33:00","date_gmt":"2019-10-08T13:33:00","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=3604"},"modified":"2026-03-04T14:56:46","modified_gmt":"2026-03-04T14:56:46","slug":"financial-reporting-standard-setting-bodies","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/financial-reporting-and-analysis\/financial-reporting-standard-setting-bodies\/","title":{"rendered":"Financial Reporting Standard-setting Bodies and Regulatory Authorities"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"QAPage\",\n  \"mainEntity\": {\n    \"@type\": \"Question\",\n    \"name\": \"Which of the following is least likely a desirable attribute of a standard-setting body?\",\n    \"text\": \"Which of the following is least likely a desirable attribute of a standard-setting body?\",\n    \"answerCount\": 3,\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"The correct answer is B. The responsibilities of all parties involved in the standard-setting process should be clearly defined. A desirable standard-setting body is independent from self-interest and guided by a well-articulated conceptual framework with a clearly stated objective.\"\n    },\n    \"suggestedAnswer\": [\n      {\n        \"@type\": \"Answer\",\n        \"text\": \"The decision-setting process for the standard-setting body should not be influenced by self-interest.\"\n      },\n      {\n        \"@type\": \"Answer\",\n        \"text\": \"The responsibilities of all the parties involved in the standards-setting process do not have to be clearly defined.\"\n      },\n      {\n        \"@type\": \"Answer\",\n        \"text\": \"The accounting standards board should be guided by a well-articulated framework that has a clearly stated objective.\"\n      }\n    ]\n  }\n}\n<\/script>\n\n\n<p><iframe loading=\"lazy\" src=\"\/\/www.youtube.com\/embed\/09q0XBIiYOE\" width=\"611\" height=\"343\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p>Standard-setting bodies and regulatory authorities play an integral role in capital market development and supervision.<\/p>\n<p>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).<\/p>\n<p>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.<\/p>\n<h2><strong>Roles and Desirable Attributes of Financial Reporting Standard-setting Bodies and Regulatory Authorities<\/strong><\/h2>\n<p>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.<\/p>\n<p>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.<\/p>\n<p>Several attributes are considered desirable for all standard setters. These include the following:<\/p>\n<ul>\n<li>the roles and responsibilities of all the parties that are involved in the standard-setting process, for example, trustees and foundations, should be clearly defined;<\/li>\n<li>professional standards, such as codes of ethics and confidentiality agreements, should be observed by all the parties that are involved in the standard-setting process;<\/li>\n<li>the standard-setter should have adequate authority, resources, and competencies to fulfill all of its responsibilities;<\/li>\n<li>the processes which guide the standard-setter and the formation of its standards should be consistent and clearly defined;<\/li>\n<li>a well-articulated framework with a clearly stated objective should guide the accounting standards board. Additionally, the accounting standards board should be able to act independently and make decisions that are consistent with this stated objective;<\/li>\n<li>the decision-setting process should not bow to pressure from external forces and should not be influenced by self or special interests; and<\/li>\n<li>the standards which are derived by standard-setters should be in the public interest and be of a high quality which will meet the quality threshold set by regulatory authorities.<\/li>\n<\/ul>\n<blockquote>\n<h2><strong>Question<\/strong><\/h2>\n<p>Which of the following is <em>least likely<\/em> a desirable attribute of a standard-setting body?<\/p>\n<ol style=\"list-style-type: upper-alpha;\">\n<li data-tadv-p=\"keep\">The decision setting process for the standard-setting body should not be influenced by self-interest.<\/li>\n<li data-tadv-p=\"keep\">The responsibilities of all the parties involved in the standards-setting process do not have to be clearly defined.<\/li>\n<li data-tadv-p=\"keep\">The accounting standards board should be guided by a well-articulated framework that has a clearly stated objective.<\/li>\n<\/ol>\n<p><strong>Solution<\/strong><\/p>\n<p>The correct answer is <strong>B<\/strong>.<\/p>\n<p>The responsibilities of all the parties involved in the standards-setting process should be clearly defined. The other two statements are correct.<\/p>\n<\/blockquote>","protected":false},"excerpt":{"rendered":"<p>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&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-3604","post","type-post","status-publish","format-standard","hentry","category-financial-reporting-and-analysis","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Financial Reporting Standard Setters | CFA Level 1<\/title>\n<meta name=\"description\" content=\"Learn about key accounting standard-setting bodies, including IASB and FASB, and their role in financial reporting regulations.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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