The accounting rules behind U.S. financial statements are not written by any single authority. Several accounting governing bodies split the work: the Financial Accounting Standards Board writes the rules for private-sector companies, the Governmental Accounting Standards Board writes them for state and local governments, the Securities and Exchange Commission enforces reporting by public companies, the Public Company Accounting Oversight Board polices the auditors who sign off on those filings, and the American Institute of Certified Public Accountants credentials CPAs and sets standards for private-company engagements. Outside the United States, the International Accounting Standards Board writes IFRS, and its sister board, the International Sustainability Standards Board, is now doing the same for sustainability disclosure.
Once you know which body owns which piece, the system reads less like alphabet soup and more like a division of labor. Here is what each one does and where its authority ends.
Financial Accounting Standards Board (FASB)
FASB is the private-sector body that writes U.S. Generally Accepted Accounting Principles. The SEC formally recognizes FASB as the authoritative standard-setter for public companies, so any company that files with the SEC has to follow its rules.1Securities and Exchange Commission. Policy Statement: Reaffirming the Status of the FASB as a Designated Private-Sector Standard Setter
All of GAAP lives in one organized database, the FASB Accounting Standards Codification (ASC). Instead of hunting through decades of individual pronouncements, accountants look up topics in the ASC.2Financial Accounting Standards Board. About the FASB Accounting Standards Codification When FASB changes something, it issues an Accounting Standards Update (ASU) that formally amends the Codification. ASUs are mandatory for entities that follow U.S. GAAP, though effective dates sometimes differ for larger and smaller companies.
New standards do not appear overnight. FASB researches an issue, often publishes a discussion paper, then releases an Exposure Draft for public comment, holds roundtables if needed, and redeliberates before issuing a final ASU.3Financial Accounting Standards Board (FASB). Standard-Setting Process Preparers and auditors get a real chance to weigh in before anything becomes binding.
Full GAAP can be heavy for small businesses that don’t have public investors. The Private Company Council advises FASB on where the rules can be simplified for private companies without stripping out information lenders and owners actually need.4Financial Accounting Foundation. Financial Accounting Foundation Establishes New Council to Improve Standard Setting for Private Companies The result is a set of optional alternatives. Private companies can elect to amortize goodwill straight-line over ten years rather than test it for impairment annually, and they can fold certain intangibles like noncompetition agreements into goodwill instead of tracking them separately.
U.S. Securities and Exchange Commission (SEC)
The SEC is the federal agency that oversees public securities markets. Its mission is investor protection, fair markets, and truthful financial reporting by public companies.5U.S. Securities and Exchange Commission. U.S. Securities Exchange Act of 1934 – Selected Provisions
Any company offering securities to the public must register with the SEC and then keep filing reports for as long as those securities trade. The core filings are the annual Form 10-K,6Securities and Exchange Commission. Form 10-K General Instructions the quarterly Form 10-Q,7Securities and Exchange Commission. Form 10-Q General Instructions and Form 8-K, the current report companies must file within four business days of significant events. Triggers for an 8-K include entering or terminating a major contract, completing an acquisition, changing auditors, a material cybersecurity incident, or the departure of a CEO or CFO.8Securities and Exchange Commission. Form 8-K Filings run through EDGAR, the SEC’s electronic system, and become publicly searchable almost immediately.9U.S. Securities and Exchange Commission. About EDGAR
The SEC has statutory authority to write its own accounting rules but has delegated that work to FASB since 1973 and treats FASB’s standards as GAAP.1Securities and Exchange Commission. Policy Statement: Reaffirming the Status of the FASB as a Designated Private-Sector Standard Setter It retains the ability to override or supplement those standards, and its Division of Corporation Finance reviews public filings to check GAAP compliance and disclosure quality.
Enforcement is where the SEC’s teeth show. Its Division of Enforcement investigates fraudulent financial reporting, insider trading, and market manipulation, bringing cases in federal court or through administrative proceedings. At the far end, the SEC can suspend trading in a company’s stock or revoke its registration entirely. FASB writes the rules; the SEC is what makes ignoring them expensive.
Public Company Accounting Oversight Board (PCAOB)
Before 2002, the accounting profession was expected to police itself. Enron and WorldCom demonstrated the limits of that arrangement. Congress passed the Sarbanes-Oxley Act of 2002 and created the PCAOB as a nonprofit corporation to oversee auditors of public companies.10Public Company Accounting Oversight Board (PCAOB). Sarbanes-Oxley Act of 2002 The Board has five members, and no more than two can be current or former CPAs, a deliberate limit meant to keep the oversight body from being captured by the profession it regulates.
Any accounting firm that audits a U.S. public company must register with the PCAOB. Firms auditing more than 100 public companies get inspected annually; smaller firms are inspected at least once every three years.11Public Company Accounting Oversight Board. PCAOB Inspection Procedures Inspectors look at individual audit engagements and the firm’s overall quality control, and the resulting reports are public.12Public Company Accounting Oversight Board. Basics of Inspections
The PCAOB writes its own auditing, quality control, and ethics standards for public company audits. These are separate from the private-company auditing standards issued by the AICPA and tend to be more demanding. Sanctions available to the PCAOB range from censure and additional training to civil money penalties, temporary or permanent suspension from public company audits, and revocation of a firm’s registration.13Public Company Accounting Oversight Board. Section 5 – Investigations and Adjudications The SEC in turn oversees the PCAOB, approving its rules and budget, so auditors answer to the PCAOB and the PCAOB answers to the SEC.
American Institute of Certified Public Accountants (AICPA)
The AICPA is the primary professional association for CPAs in the United States. Together with the Chartered Institute of Management Accountants, it forms the Association of International Certified Professional Accountants, which describes itself as the world’s largest accounting and finance membership body.14AICPA & CIMA. World’s Largest Accounting and Finance Membership Body It doesn’t set GAAP, and it doesn’t regulate public companies, but it fills roles no one else on this list covers.
Licensing the Profession
The AICPA develops and scores the Uniform CPA Examination that every aspiring CPA must pass. The exam is national, but individual state boards of accountancy issue the actual license and set their own education and experience requirements. The National Association of State Boards of Accountancy coordinates among those state boards, handling services like credential evaluation and license reciprocity.15NASBA (National Association of State Boards of Accountancy). NASBA Licensing
Code of Professional Conduct
The AICPA’s Code of Professional Conduct sets the ethical floor. Members must maintain integrity, objectivity, and independence, and exercise due care. Public trust comes ahead of personal gain, and a CPA cannot subordinate professional principles to a client’s preferences.16AICPA & CIMA. AICPA Code of Professional Conduct Violations are investigated jointly by the AICPA and state CPA societies. Consequences can include suspension or expulsion from membership.
Private-Company Auditing, Review, and Compilation Standards
This is where the AICPA’s role gets concrete. FASB writes the accounting rules that private companies follow, but the AICPA writes the standards for how CPAs examine those companies’ financial statements. Its Auditing Standards Board issues Statements on Auditing Standards for audits of non-public entities, separate from the PCAOB’s standards for public company audits.17AICPA & CIMA. AICPA Auditing Standards Board (ASB)
Not every private company needs a full audit. The Accounting and Review Services Committee issues standards for two lighter engagements.18AICPA & CIMA. Preparation, Compilation, and Review Standards In a compilation, a CPA organizes management’s financial data into proper financial statement format without providing any assurance that the numbers are accurate. A review goes a step further, providing limited assurance that no material changes are needed for the statements to conform to GAAP. Small businesses seeking a bank loan or bringing in an investor usually encounter one of these two rather than a full audit.
The AICPA also issues Statements on Standards for Attestation Engagements (SSAEs), which cover situations where a CPA is asked to verify something other than historical financial statements, such as internal controls at a service organization or compliance with a specific contract.19AICPA & CIMA. AICPA SSAEs – Currently Effective
Governmental Accounting Standards Board (GASB)
State and local governments don’t use the same accounting rules as private companies. GASB, an independent organization established in 1984, sets GAAP specifically for U.S. state and local governments, including cities, counties, public universities, and transit authorities.20Governmental Accounting Standards Board. About the GASB
Like FASB, GASB operates under the Financial Accounting Foundation, which handles governance, funding, and board appointments for both boards.20Governmental Accounting Standards Board. About the GASB FASB covers private-sector and nonprofit entities; GASB covers governmental ones. The line matters because government accounting has different objectives. A city’s financial reporting isn’t about maximizing shareholder value; it’s about accountability for how taxpayer money is spent. GASB’s standards reflect that, emphasizing fund accounting and budgetary compliance in ways that look unfamiliar to anyone trained only in corporate GAAP.
International Accounting Standards Board (IASB)
Outside the United States, the dominant framework is International Financial Reporting Standards, developed by the IASB. As of 2025, 148 jurisdictions require IFRS for all or most publicly accountable companies across Europe, Africa, Asia-Oceania, the Middle East, and the Americas.21IFRS Foundation. Who Uses IFRS Accounting Standards? The IASB’s aim is a single set of globally accepted reporting standards so investors can compare companies across borders without translating between national rules.22IFRS Foundation. International Accounting Standards Board
The IASB operates under the IFRS Foundation, a not-for-profit that handles governance, funding, and trustee appointments. It follows a due-process model similar to FASB’s, including public consultations and exposure drafts before finalizing new standards.
One boundary worth flagging: the SEC requires domestic U.S. public companies to use U.S. GAAP, and there are currently no plans to permit or require IFRS for domestic issuers.23IFRS Foundation. United States Foreign private issuers listed on U.S. exchanges can file IFRS statements with the SEC without reconciling them to GAAP. Multinationals often maintain dual reporting systems or carefully manage the differences between the two frameworks.
International Sustainability Standards Board (ISSB)
The newest body in this landscape sits under the IFRS Foundation alongside the IASB. The ISSB has issued two initial standards. IFRS S1 requires companies to disclose sustainability-related risks and opportunities across short, medium, and long time horizons. IFRS S2 focuses on climate-related disclosures and fully incorporates the recommendations of the Task Force on Climate-related Financial Disclosures.24IFRS Foundation. Introduction to the ISSB and IFRS Sustainability Disclosure Standards As of 2025, 37 jurisdictions have decided to use or are taking steps to incorporate ISSB standards.25IFRS Foundation. Adoption Status of ISSB Standards
In the United States, the SEC adopted its own climate disclosure rules in March 2024 but stayed their effectiveness pending litigation. In March 2025, the SEC voted to withdraw its defense of those rules entirely.26U.S. Securities and Exchange Commission. SEC Votes to End Defense of Climate Disclosure Rules Mandatory sustainability reporting in the U.S. remains unresolved at the federal level.
How the Bodies Fit Together
The relationships behind the acronyms are more logical than they appear. The Financial Accounting Foundation sits atop the private-sector hierarchy, overseeing FASB (for businesses and nonprofits) and GASB (for governments). The SEC gives FASB’s standards legal force for public companies and enforces disclosure. The PCAOB does the parallel job for the auditors who sign off on those filings. The AICPA credentials individual CPAs and writes the standards for private-company audits, reviews, compilations, and attestation work, filling in the space the PCAOB doesn’t cover. Internationally, the IFRS Foundation mirrors this structure through the IASB for financial reporting and the ISSB for sustainability.
Where the system gets complicated is at the seams. A multinational may follow FASB rules in the U.S. and IASB rules abroad, get audited under PCAOB standards for its U.S. listing and AICPA standards for a private subsidiary, and face ISSB-based sustainability requirements in certain markets. Knowing which body owns which rule is the first practical step toward sorting out any of it.