DEFINITION of 'Financial Accounting Foundation - FAF'
An independent, private-sector organization that is mainly responsible for establishing and improving financial accounting and operating standards, and educating its constituents about those standards. The Financial Accouting Foundation has responsibility for the oversight, administration and finances of the Financial Accounting Standards Board (FASB), the Governmental Accounting Standards Board (GASB), and their advisory councils. It also selects the members of the boards and councils that set accounting standards, and protects their independence.
BREAKING DOWN 'Financial Accounting Foundation - FAF'
The FAF is a non-stock Delaware corporation established in 1972 that operates only for educational, charitable, scientific and literary purposes.
Because capital markets and governments consist of so many participants with competing demands and proprietary interests, independence is key to the activities of the FAF's standard-setting boards, the FASB and GASB. This independence allows them to provide objectivity and integrity to the U.S. financial reporting system. Because the FAF is an independent entity with no stakes in specific outcomes, the FAF's boards can make objective decisions on accounting standards without being swayed by industrial lobbying groups or political pressure.