Which organization is responsible for setting standards for private sector financial reporting in the United States?

• A. Governmental Accounting Standards Board
• B. International Accounting Standards Board
• C. Financial Accounting Standards Board
• D. American Institute of Certified Public Accountants

Answer: (C)

The organization responsible for setting standards for private sector financial reporting in the United States is the Financial Accounting Standards Board. It develops and issues Generally Accepted Accounting Principles (GAAP), which guide how private companies prepare and present their financial statements. This board operates under the Financial Accounting Foundation and its standards are recognized as the authoritative framework for non-governmental entities in the U.S. By contrast, the Governmental Accounting Standards Board sets standards for state and local governments, the International Accounting Standards Board issues IFRS used by many other countries but not as the sole U.S. private-sector framework, and the American Institute of Certified Public Accountants is a professional body that issues auditing standards and guidance but does not set GAAP for private-sector financial reporting.