Promulgation of GAAP - Responsibility and Role | CFA Level 1 Exam

The promulgation of GAAP is a responsibility that rests with

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Question

The promulgation of GAAP is a responsibility that rests with:

Answers

A. The Securities and Exchange Commission (SEC).

B. The Committee on Accounting Procedures (CAP).

C. None of these answers.

D. The American Accounting Association (AAA).

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Explanations

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A. B. C. D.

The SEC has the primary responsibility for creation of accounting standards in the US. The AAA does issue its own statements about accounting standards and these are quite influential in shaping the official framework. However, its statements are not binding on the industry unless the SEC adopts them.Currently, the

SEC has relegated most of the duties of addressing needs for various accounting standards to the Financial Accounting Standards Board (FASB), though it remains the final authority in these matters.

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