The Government Accounting Standards Board (GASB) is also involved in the establishment of GAAP. It is a not-for-profit organization formed in 1984 that provides accounting standards for state and local governments in the US. The federal government does not fund or control the GASB and its standards are only reinforced by auditors. GASB ensures that financial reporting by the government meets the relevance, consistency and reliability criteria.
It also improves other issued standards to make them relevant and applicable to government units. GASB also assist these units to fully understand and implement the principles. The GASB standards ensure transparency and accountability of individuals in charge of public funds. They assist the individuals in decision-making and in repayment of public debt. The GASB standards are deemed to be objective as the issuing body is not aligned to the government and therefore lacks political interference. (www. gasb. org,2007)
The United States Securities Exchange Commission (SEC), while it does not in itself issue GAAP, it has been instrumental in the creation of various private bodies that issue GAAP. It also collaborates with the bodies in issuing of GAAP. The SEC is empowered to issue financial reporting standards to public companies as stipulated under Securities Exchange Act of 1934, a role it delegates to private bodies such as AICPA and FASB which it deems to be more objective and better equipped for the role and in public interest.
(Pakhare, Jayashree, 2007) The Financial Accounting Standards Board (FASB) formed in 1973 is the premier organization in setting GAAP in US. It issues standards that are recognized by SEC and AICPA as the authoratitive guide financial reporting. It issues and improves standards that are that ensure financial statements meet the fundamental qualities of reliability, relevance, comparability and consistency. These standards cover a wide range of organizations both in the public and private sectors.
They are also under constant reviews and improvements to correspond to the dynamic business environment. The FASB also identifies new areas in financial reporting that require specific standards to be set. It is also incumbent on the FASB to oversee convergence of GAAP with International Accounting Standards (IAS). It also evaluates the impact past standards have in the accounting world. (www. fasb. org, 2008)