Financial Accounting Foundation - FAF

AAA

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.




RELATED TERMS
  1. Credit Business Associate - CBA

    A designation awarded to those who show mastery in financial ...
  2. Auditing Standards Board - ASB

    The American Institute of Certified Public Accountants' (AICPA) ...
  3. National Association Of State Boards ...

    A U.S. nonprofit group founded in 1908 that seeks to enhance ...
  4. Government Accounting Standards ...

    An organization whose main purpose is to improve and create accounting ...
  5. Financial Accounting Standards ...

    A seven-member independent board consisting of accounting professionals ...
  6. Generally Accepted Auditing Standards ...

    A set of systematic guidelines used by auditors when conducting ...
Related Articles
  1. Markets

    Financial Statement Manipulation An Ever-Present Problem For Investors

    The SEC has taken steps to eliminate this type of corporate fraud, but it remains a real risk for investors.
  2. Retirement

    Navigating Government And Nonprofit Financial Statements

    Learn how to trace where your tax dollars and charitable donations are going.
  3. Insurance

    International Reporting Standards Gain Global Recognition

    Comparing financial numbers from corporations in different countries is possible with the adoption of IFRS.
  4. Fundamental Analysis

    Calculating Return on Net Assets

    Return on net assets measures a company’s financial performance.
  5. Economics

    Understanding Cost of Revenue

    The cost of revenue is the total costs a business incurs to manufacture and deliver a product or service.
  6. Economics

    Explaining Carrying Cost of Inventory

    The carrying cost of inventory is the cost a business pays for holding goods in stock.
  7. Investing

    How To Calculate Minority Interest

    Minority interest calculations require the use of minority shareholders’ percentage ownership of a subsidiary, after controlling interest is acquired.
  8. Economics

    Explaining Replacement Cost

    The replacement cost is the cost you’d have to pay to replace an asset with a similar asset at the present time and value.
  9. Economics

    How Does National Income Accounting Work?

    National income accounting is an economic term describing the system used by a country to gather data and determine aggregate economic activity.
  10. Fundamental Analysis

    Understanding the EBITDA/EV Multiple

    The EBITDA/EV multiple is a financial ratio that measures a company’s return on investment.
RELATED FAQS
  1. How does the Financial Accounting Standards Board (FASB) establish accounting protocol?

    Financial accounting protocol in the United States is largely based on a collaboration of three organizations: the Securities ... Read Full Answer >>
  2. What is the difference between IAS and GAAP?

    To answer this question, we must first define what IAS and GAAP are, in order to get a better grasp of the function they ... Read Full Answer >>
  3. What are some examples of general and administrative expenses?

    In accounting, general and administrative expenses represent the necessary costs to maintain a company's daily operations ... Read Full Answer >>
  4. How do dividend distributions affect additional paid in capital?

    Whether a dividend distribution has any effect on additional paid-in capital depends solely on what type of dividend is issued: ... Read Full Answer >>
  5. Why can additional paid in capital never have a negative balance?

    The additional paid-in capital figure on a company's balance sheet can never be negative because companies do not pay investors ... Read Full Answer >>
  6. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  2. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  3. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  4. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  5. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  6. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!