1. The US Statutory Framework
In the United States, the SEC holds ultimate statutory authority under the Securities Exchange Act of 1934 to set accounting standards for public companies. Through Financial Reporting Release (FRR) No. 46, the SEC formally recognized the FASB’s pronouncements as “authoritative.” Private companies look to the AICPA (American Institute of Certified Public Accountants), which recognizes FASB standards under Rule 203 of its Code of Professional Conduct.
2. The European Union Endorsement Framework
The European Union does not automatically adopt IFRS as issued by the IASB. Under Regulation (EC) No 1606/2002 (The IAS Regulation), all EU-listed companies must prepare consolidated financial statements using IFRS, but each standard must pass a strict political and technical filter:
  • EFRAG: Provides technical advice and assesses whether the standard meets the “conducive to the European public good” criterion.
  • Accounting Regulatory Committee (ARC): Composed of representatives from EU member states, the ARC delivers a political vote to approve or reject the standard for legal codification into EU law.

 
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