Should the Sec replace the FASB - Research Paper Example

The term FASB stands for Financial Accounting Standards Board, which is a private, non-profit making organization that was created in 1973. Its primary objective is to bring about generally accepted accounting principles (GAAP) in USA in the interest of the public. The organization is responsible for setting accounting standards for all public companies within the United States. The main mission of FASB is to establish and improve financial accounting and reporting that will foster financial reporting by non-governmental entities that provide useful information to the public, auditors, investors and other users of financial reports.

Generally, FASB has five main goals: improving common understanding of the nature and purposes of financial reports, keeping accounting standards updated to reflect various changes in methods of conducting business and in the economy in general, promoting international convergence of accounting standards that are concurrent with making better the reasonability of financial reporting, taking into account quickly any areas of significance with regards to deficiency when it comes to financial reporting which maybe improved by way of standard setting, improving the usefulness of financial reporting by focusing on the important qualities of comparability and consistency and also on the primary characteristics of relevance and reliability.

(Loren, John and Jefferson,2010)SEC stands for U.S. Securities and Exchange Commission .its mission is to protection of investors, maintaining fair, orderly, and highly efficient markets, and facilitating capital formation. The common interest of citizens is a growing economy which produces jobs, improves peoples’ living standard, and protects their savings. Thus the actions of SEC must be taken with an approach toward promotion of capital formation which is necessary for sustaining economic growth.

(Young, 2003 p27)The SEC does oversee many key participants in the world of securities, including exchanges of securities, securities dealers, investment advisors, and also mutual funds. SEC is concerned with promoting disclosure of market-related information, protecting against fraud and maintaining fair dealing.SEC is the main overseer and regulator of the securities markets in the U.S., it also works hand in hand with a host of other institutions, including Congress, federal departments and agencies, the stock exchange, securities regulators, and many other private sector organizations.

The main responsibilities of SEC are interpretation of federal securities laws; issuance of new rules and amendment of existing rules; overseeing the inspection of securities firms, investment advisers, brokers and ratings agencies; overseeing all private regulatory organizations in accounting, securities and auditing fields; and coordination of U.S. securities regulation with the federal, the state, and also foreign authorities. (Congress, 1963)ConclusionBased on the discussion presented above, it is very clear that FASB and SEC perform very diverse roles in our financial and accounting fields.

It is therefore very important that both of them remain independent so that they can continue performing their diverse roles accordingly and independently. FASB mainly deals with matters of accounting and auditing whereas SEC deals with securities and markets. Combining the two would therefore mean that the independence of one or both will be compromised, affecting performance. I am therefore not in favor of the proposed move to combine the two. Reference list:Congress. (1963). Congressional Record; Volume 109-122, volumes 1963-1966.

p15047Nikolai, Loren A, Bazley John D. and Jones, Jefferson P. (2010). Intermediate Accounting.eleventh edition, Cengage Learning.p 27Young, Michael R. (2003).The Financial Reporting Handbook. Aspen Pub Publication. p27