Question

What is the hierarchy of accounting standard-setting authority?

Answer 1

The hierarchy of authority in accounting standard-setting includes the IASB, FASB, SEC, AICPA, and State Boards of Accountancy. The IASB is the highest authority at the international level.

Step-by-step explanation:

Hierarchy of authority refers to the chain of command that places one individual or office in charge of another, who in turn must answer to her own superiors. For example, as an employee at Walmart, your shift manager assigns you tasks. Your shift manager answers to his store manager, who must answer to her regional manager, and so on, up to the CEO who must answer to the board members, who in turn answer to the stockholders. Everyone in this bureaucracy follows the chain of command.

In accounting standard-setting, the hierarchy of authority refers to the levels of different organizations responsible for setting accounting standards. The hierarchy is as follows:

1. International Accounting Standards Board (IASB)
2. Financial Accounting Standards Board (FASB)
3. Securities and Exchange Commission (SEC)
4. American Institute of Certified Public Accountants (AICPA)
5. State Boards of Accountancy

Each organization has a different role in establishing and enforcing accounting standards, with the IASB being the highest authority at the international level.