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.