What is the 'Financial Accounting Standards Board - FASB'

The Financial Accounting Standards Board is an independent entity responsible for generally accepted accounting principles in the United States. The FASB was formed in 1973 to succeed and carry on the mission and activities of the Accounting Principles Board.

BREAKING DOWN 'Financial Accounting Standards Board - FASB'

The Financial Accounting Standards Board has the authority to establish and interpret generally accepted accounting principles in the United States. The Securities and Exchange Commission and American Institute of Certified Public Accountants both recognize FASB standards as the official authority for the basis and preparation of financial statements in the United States.

The FASB sets out to improve corporate accounting practices by enhancing guidelines set out for accounting reports, identifying and resolving issues in a timely manner, and creating a uniform standard across the financial markets.

The Structure and Mission of the FASB

The FASB's stated mission is to establish and improve financial accounting and reporting standards, and to provide useful information to investors and other people who use financial reports. The FASB seeks to actively achieve this mission by facilitating an open and independent reporting process that allows broad participation from company stakeholders.

The FASB is part of a larger, nonprofit, private group that is independently structured from all other business entities and professional organizations. The overall structure is comprised of the FASB, the Financial Accounting Foundation, the Financial Accounting Standards Advisory Council, the Governmental Accounting Standards Board and the Governmental Accounting Standards Advisory Council.

The mission and activity of the FASB are overseen by FAF's Board of Trustees. FAF is responsible for all the oversight, administration and finances of the FASB and the GASB. The FAF's advisory board is also responsible for protecting the standard-setting process and appointing members of the other organizations.

FASAC and FASB Standard-Setting Process

The FASAC was created to advise the FASB on issues, agendas, priorities, and standard-setting and is comprised of more than 30 members. The FASAC is integral to the successful operations of the FASB because it broadly represents preparers, auditors and users of financial statement and information.

FASAC also forms recommendations of task forces established by the council. Special task force examples include the Derivative Implementation Group or the Emerging Issues Task Force. FASB standards are listed as numbered statements beginning at one and continuing beyond 150 today.

  1. Accounting Interpretation

    Accounting interpretation is a statement, issued by accounting ...
  2. Accounting Research Bulletins - ...

    Accounting Research Bulletins were documents published by the Committee ...
  3. Accounting Standard

    An accounting standard is a common set of principles, standards ...
  4. Financial Accounting Standard 157 ...

    FAS 157 is the Financial Accounting Standards Board (FASB)’s ...
  5. Discussion Memorandum

    Published by the Financial Accounting Standards Board (FASB), ...
  6. APB Opinion

    An authoritative pronouncement issued by the Accounting Principles ...
Related Articles
  1. Investing

    New Accounting Rules To Accelerate Revenue Recognition

    An FASB accounting standards change will lead to accelerated revenue recognition for many companies, providing a much-needed boost during sluggish economic growth.
  2. Investing

    Why Financial Statements Are Harder to Read Than Ever Before

    Understand four major reasons that financial statements published in 2016 are more complicated and difficult to read than they were in the past.
  3. Investing

    Financial History: The Rise of Modern Accounting

    How government regulation and the modern accounting profession grew hand-in-hand.
  4. Investing

    Mark-To-Market: Tool Or Trouble?

    Mark-to-market accounting can be a valuable practice, but all bets are off when the market fluctuates wildly.
  5. Investing

    What is Accounting?

    Accounting is the recording of financial transactions of a business or organization. It also includes the process of summarizing, analyzing and reporting these transactions in financial statements.
  6. Investing

    Footnotes: Early Warning Signs For Investors

    These documents hold very important information, but reading them takes skill.
  7. Investing

    Evaluating the board of directors

    Corporate structure can tell you a lot about a company's potential. Learn more here.
  1. When and why were GAAP first established?

    Take a deeper look into the development and purpose of the generally accepted accounting principles, also known as GAAP, ... Read Answer >>
  2. How do investors and lenders benefit from financial accounting?

    Read about the benefits of financial accounting, including access to information and transparency between companies and their ... Read Answer >>
  3. What is the difference between principles-based accounting and rules-based accounting?

    Almost all companies are required to prepare their financial statements as set out by the Financial Accounting Standards ... Read Answer >>
  4. How should a change in accounting principle be recorded and reported?

    Learn about changes in accounting principle and why businesses make them, as well as the reporting and recording requirements ... Read Answer >>
  5. How do businesses determine if an asset may be impaired?

    Find out how a business should determine if an asset may be impaired in accordance with the generally accepted accounting ... Read Answer >>
  6. What is the difference between GAAP and IFRS?

    Read about some of the primary methodological and practical differences between IFRS and GAAP, the two primary financial ... Read Answer >>
Hot Definitions
  1. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  2. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  3. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  4. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  5. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  6. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
Trading Center