Which organization establishes federal accounting standards used in the United States?

• A. Federal Accounting Standards Advisory Board
• B. Financial Accounting Standards Board
• C. Governmental Accounting Standards Board
• D. Securities and Exchange Commission

Answer: (A)

Federal accounting standards for the U.S. government are set by the Federal Accounting Standards Advisory Board. This board was created specifically to establish accounting standards for the federal government and to issue Statements of Federal Financial Accounting Standards (SFFAS). This is different from the Financial Accounting Standards Board, which sets GAAP for nongovernmental entities, and from the Governmental Accounting Standards Board, which handles state and local governments. The Securities and Exchange Commission does not set accounting standards; it enforces compliance with GAAP and oversees financial reporting more broadly, but relies on the other boards for the actual standards. So, for federal government accounting standards, the correct body is the Federal Accounting Standards Advisory Board.