Final answer:
The Financial Accounting Standards Board (FASB) is a private organization responsible for setting accounting standards known as GAAP in the U.S., not auditing standards or a division of the SEC. Its role has been reinforced by legislation like the Sarbanes-Oxley Act of 2002, which was enacted to protect investors after major accounting scandals.
Step-by-step explanation:
The Financial Accounting Standards Board (FASB) is not a division of the Securities and Exchange Commission (SEC), nor does it solely consist of members of the American Institute of Certified Public Accountants, and it is not responsible for setting auditing standards. Instead, the FASB is a private body that is responsible for establishing accounting standards within the United States. These standards are known as Generally Accepted Accounting Principles (GAAP), and they serve as guidelines for the preparation of financial statements.The importance of such a body has been highlighted by major accounting scandals involving corporations like Enron, Tyco International, and WorldCom. These scandals led to the creation of the Sarbanes-Oxley Act in 2002. This act aimed to protect investors and restore confidence in financial reports by increasing accountability and transparency within the financial system.