Which private-sector organization sets accounting standards in the United States?

The Financial Accounting Standards Board, or FASB, sets accounting standards for U.S. nongovernmental organizations.

FASB develops and maintains the authoritative Accounting Standards Codification for U.S. Generally Accepted Accounting Principles (GAAP). Its standards guide financial reporting by businesses and other private-sector entities, helping investors, lenders, auditors, and companies compare financial information.

The board was established in 1973, replacing the American Institute of Certified Public Accountants’ Accounting Principles Board. FASB operates under the oversight of the nonprofit Financial Accounting Foundation, which supports the standard-setting structure and appoints the board’s members.

The Securities and Exchange Commission is an important regulator, but it is not the private-sector standard setter named in this question. The SEC has legal authority over reporting by public companies and recognizes FASB standards as authoritative for nongovernmental entities. The International Accounting Standards Board develops IFRS internationally, while the AICPA is a professional association that historically played a larger standard-setting role. Government entities generally fall under separate standard-setting bodies, including the Governmental Accounting Standards Board.