What federal agency has the authority to regulate accounting practices for public companies?

The Securities and Exchange Commission (SEC) is the federal agency responsible for regulating accounting practices for public companies. This agency was established to protect investors, maintain fair and efficient markets, and facilitate capital formation. One of its primary roles is overseeing the financial disclosures made by publicly traded companies, ensuring that they provide accurate and complete information to shareholders and the public.

The SEC requires companies to adhere to generally accepted accounting principles (GAAP) when preparing their financial statements. The implications of SEC oversight are significant, as it helps to uphold transparency and accountability in financial reporting, safeguarding investor interests.

The roles of the other agencies mentioned differ from that of the SEC. For instance, the Internal Revenue Service (IRS) primarily deals with tax collection and tax law enforcement rather than accounting practices. The Federal Trade Commission (FTC) focuses on consumer protection and antitrust issues, while the Financial Accounting Standards Board (FASB) sets accounting standards but does not have regulatory authority over public companies in the same way the SEC does. The FASB establishes the standards that the SEC requires companies to follow, but the SEC enforces compliance with these standards within the public company sector.