Question: If FASB sets U.S. GAAP and the PCAOB (and the ASB) establishes rules for performing an audit, what

function does the SEC actually serve?

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Answer: The goal of the work done by the SEC is summed up in the following statement from its Web site: “The

laws and rules that govern the securities industry in the United States derive from a simple and straightforward

concept: all investors, whether large institutions or private individuals, should have access to certain basic facts

about an investment prior to buying it, and so long as they hold it.”

Thus, the SEC strives to make certain that the organizations that fall under its jurisdiction are in total compliance

with all laws so that decision makers have ready access to information viewed as relevant. It reviews the required

filings submitted by each organization to ensure that the rules and regulations are followed. The SEC also has

the power to enforce securities laws and punish companies and individuals who break them. For example, if a

company fails to disclose a significant transaction or other event that the SEC believes is necessary, trading of that

company’s securities can be halted until the matter is resolved. Such regulatory actions can cause a huge financial

loss for a business; thus, compliance is viewed as vital.