The paper discusses the major issues connected with the accreditation procedures in higher education system in the U.S. The questions raised are as follows: what are the reliable and credible indicators of quality instruction that could be measured in the process of accreditation of higher education institutions? How does greater transparency in the accreditation process serve students and the public? What is the role that accreditors on federal and state levels can play in improving institutional accountability or changing institutional behaviour; and hence, what are the standards and implications of federal vs. state involvement in the accreditation process? What is accreditation's role in addressing problems raised by arbitrary denial of transfer of credit? And what role does accreditation play in assessing distance education? The paper supports the idea that high quality instruction, academic freedom, accountability and transparency should go hand in hand. Agreement should be reached between different parties involved on what to consider as reliable and credible indicators of quality instruction and how to best measure them for the purposes of accreditation. The evaluation data should be made a public knowledge to increase transparency and serve student interests. And finally, preserving the unique balanced relationship and golden medium that exists between peer review and appropriate levels of government involvement in the process of accreditation would be the best option for further development of higher education in the U.S. (Contains a list of 27 references and sources.)