A Perspective on the U.S. Public/Private-Sector Approach to the Regulation of Financial Reporting.

The article provides insight into the functioning of the U.S. compliance system, in the context of the overall regulatory system for financial reporting. As a central element in that regulatory system, a federal government agency collaborates with a private-sector standard-setting body. To understand the U.S. regulatory system is to understand the working of the Securities and Exchange Commission (SE) and its relation to the accounting standard-setting body. The SEC is an independent federal regulatory agency that was established in 1934 by Congressional legislation. In addition, the SEC has generally adhered to a policy of relying on the private sector for leadership in establishing and improving accounting principles.