Securities and Exchange Commission (SEC)

The Securities and Exchange Commission (SEC) is an independent federal government agency
responsible for protecting investors, maintaining fair and orderly functioning of
the securities markets, and facilitating capital formation. It was created by Congress in 1934 as
the first federal regulator of the securities markets. The SEC promotes full public disclosure,
protects investors against fraudulent and manipulative practices in the market, and monitors
corporate takeover actions.

In Pakistan Securities and Exchange Commission objective is to develop a modern and

efficient corporate sector and a capital market based on sound authority principles, in order to
encourage investment and foster economic growth and prosperity in Pakistan.

Financial Accounting Standards Board (FASB)

The Financial Accounting Standards Board (FASB) is an independent nonprofit organization that
is responsible for establishing accounting and financial reporting standards for companies and
nonprofit organizations in the United States, following generally accepted accounting principles
(GAAP). The FASB was formed in 1973 to succeed the Accounting Principles Board and carry
on its mission.

The Securities and Exchange Commission (SEC) recognizes the FASB as the accounting
standard setter for public companies. It is also recognized by state accounting boards, the
American Institute of Certified Public Accountants (AICPA), and other organizations in the
field.

The Financial Accounting Standards Board is part of a larger, independent nonprofit group that
also includes the Financial Accounting Foundation (FAF), the Financial Accounting Standards
Advisory Council (FASAC), the Governmental Accounting Standards Board (GASB), and the
Governmental Accounting Standards Advisory Council (GASAC).

Generally Accepted Accounting Principles (GAAP)

Generally Accepted Accounting Principles (GAAP) is a set of standards, guidelines, and
regulations for financial accounting. Companies should follow GAAP rules when
preparing financial statements.

GAAP rules were established to provide consistency in financial reporting

and accounting practices. The rules evolve over time. Therefore, they reflect the most relevant
and applicable accounting practices.

Generally Accepted Accounting Principles (GAAP) uses many standards and protective
measures to ensure reliable and useful accounting statements. For example, accounting is done in
fiscal periods which may not coincide with actual calendar periods. They instead coincide with
the relevant events that happen to the company with respect to accounting standards

Accounting Standards in USA

Accounting in the United States is regulated by a private-sector body (the Financial Accounting
Standards Board, or FASB), but governmental agency (the Securities and Exchange
Commission, or SEC) underpins the authority of its standards. The key link allowing this shared-
power system to work effectively is the 1973 SEC Accounting Series Release (ASR).

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.

Generally accepted accounting principles (GAAP) comprise all the financial accounting
standards, rules, and regulations that must be observed in the preparation of financial reports.
The SFASs are the major component of GAAP. The accounting and auditing regulations are
probably more voluminous in the United States than in the rest of the world combined and
substantially more detailed than in any other country. For this reason, the FASB and SEC are
considering moving U.S. GAAP away from rules-based standards toward principles-based
standards.

Accounting Standards in Asia (China)

The Accounting Law, last amended in 2000, covers all enterprises and organizations, including
those not owned or controlled by the state. It outlines the general principles of accounting and
defines the role of the government and the matters that require accounting procedures.

The China Accounting Standards Committee (CASC) was established in 1998 as the
authoritative body within the Ministry of Finance responsible for developing accounting
standards. The standard- setting process includes assigning necessary research to task forces, the
issuance of exposure drafts, and public hearings. CASC members are experts drawn from
academia, accounting firms, government, professional accounting associations, and other key
groups concerned with the development of accounting in China.

Accounting Standards in Asia (India)

The Institute of Chartered Accountants of India (ICAI), established in 1949, regulates the
profession of chartered accountancy and is responsible for developing both accounting and
auditing standards.
Companies that are not listed are only required to prepare parent-only statements, but listed
companies must prepare both consolidated and parent-only statements. Neither a statement of
shareholders’ equity nor a statement of comprehensive income is required.Financial statements
consist of two-year balance sheets, income statements, cash flow statements, and accounting
policies and notes.

Accounting Standards in Asia (Pakistan)

The accounting standards in Pakistan are based on the International Accounting Standards
Committee (IASC). While Pakistan adheres to 38 of 41 international accounting standards it does
not yet apply IAS 15, IAS 29, and IAS 41.