Which organization is responsible for the development of GAAP?

The Financial Accounting Standards Board (FASB) is the primary organization responsible for the development of Generally Accepted Accounting Principles (GAAP) in the United States. Established in 1973, the FASB's primary mission is to establish and improve standards of financial accounting and reporting. These standards provide consistency and comparability in financial reporting across different industries and sectors, which is essential for investors, creditors, and other stakeholders who rely on financial statements to make informed decisions.

The FASB works through a rigorous process that includes gathering feedback from various stakeholders, including businesses, accountants, and the public, to ensure that the standards it develops are clear, relevant, and useful. Its authority in establishing GAAP reflects its credibility and expertise in the field of accounting standards, distinguishing it as the key entity in this area of financial reporting.

In contrast, while the American Institute of Certified Public Accountants (AICPA) plays an important role in the field of accountancy through guidelines and the development of auditing standards, it does not have the same authority to set GAAP. The Securities and Exchange Commission (SEC) oversees the enforcement of securities laws and has an interest in accounting standards as they pertain to public companies, but it relies on the FAS