The Role of the SEC
Response to the following problem:
It is not often that the federal government has allowed the private sector to govern itself, but that is exactly what has happened with the field of accounting. The SEC has delegated the responsibility of rule making to the FASB, a group of seven individuals who are hired full-time to discuss issues, research areas of interest, and determine what GAAP is and will be.
What are the advantages of allowing the private sector to determine accounting standards? Identify any advantages that the SEC might gain if it established the rules that govern the practice of accounting.