Everything about The Financial Accounting Standards Board totally explained
The
Financial Accounting Standards Board (FASB) is a private,
not-for-profit organization whose primary purpose is to develop
generally accepted accounting principles (GAAP) within the
United States in the public's interest. The
Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. It was created in
1973, replacing the
Accounting Principles Board and the
Committee on Accounting Procedure of the
American Institute of Certified Public Accountants. The FASB's mission is "to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information."
Description
The FASB isn't a governmental body. The SEC has statutory authority to establish financial accounting and reporting standards for publicly held companies under the
Securities Exchange Act of 1934. Throughout its history, however, the Commission’s policy has been to rely on the private sector for this function to the extent that the private sector demonstrates ability to fulfill the responsibility in the public interest.
The FASB is part of a structure that's independent of all other business and professional organizations. Before the present structure was created, financial accounting and reporting standards were established first by the
Committee on Accounting Procedure of the
American Institute of Certified Public Accountants (1936–1959) and then by the
Accounting Principles Board, also a part of the AICPA (1959–73). Pronouncements of those predecessor bodies remain in force unless amended or superseded by the FASB.
The FASB is subject to oversight by the
Financial Accounting Foundation (FAF), which selects the members of the FASB and GASB and funds both organizations. The Board of Trustees of the FAF, in turn, is selected in part by a group of organizations including:
The FASB is in the middle of a convergence project with the
International Accounting Standards Board to make it easier for companies to report financial statements on an international level, so that separate financial statements are not needed for U.S. and international markets. As part of the convergence project, the FASB has started transitioning from the principle of
historical cost to
fair value.
FASB pronouncements
In order to establish accounting principles, the FASB issues pronouncements publicly, each addressing general or specific accounting issues. These pronouncements are:
Statements of Financial Accounting Standards
Statements of Financial Accounting Concepts
FASB Interpretations
FASB Technical Bulletins
EITF AbstractsFurther Information
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