Accounting in the United States is controlled by a private-sector body (the Monetary
Accounting Standards Board, or even FASB), but a governmental company (the Securities and
Trade Commission, or SEC) supports the authority of its requirements. The key link
allowing this particular shared-power system to work effectively may be the 1973 SEC Accounting
Sequence Release (ASR) No. 150.
This release states:
The Commission intends to continue its policy of looking to the private
sector for leadership in establishing and improving accounting principles.
For purposes of this policy, principles, standards, and practices promulgated
by the FASB in its statements and interpretations, will be considered by the
Commission as having substantial authoritative support, and those contrary
to such FASB promulgations will be considered to have no such support.
Until 2002, the United states Institute of Certified Public Accountants (AICPA), an additional
private-sector body, set auditing standards. For the reason that year, the Public Company Sales
Oversight Board (PCAOB) was set up, with broad powers to manage audits and
auditors of public businesses. The PCAOB, discussed later, is really a private organization
overseen through the SEC.