Financial Accounting Standards Board Flashcards, test questions and answers

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What is Financial Accounting Standards Board?

The Financial Accounting Standards Board (FASB) is an independent, private-sector body that develops and establishes financial accounting and reporting standards for public and private companies in the United States. The mission of FASB is to establish and improve standards of financial accounting and reporting that promote useful information for investors, creditors, and other users of financial reports.FASB was founded in 1973 as a successor to the American Institute of Certified Public Accountants’ (AICPA) Committee on Accounting Procedure (CAP). Since then, it has been responsible for establishing Generally Accepted Accounting Principles (GAAP), which are used by all publicly traded companies in their external financial statements. FASB also issues interpretations to GAAP when new circumstances arise or existing rules require clarification.In addition to setting GAAP, FASB actively monitors the changing needs of its stakeholders by issuing Statement on Auditing Standards (SASs), Statements on Standards for Attestation Engagements (SSAs), Exposure Drafts, Technical Bulletins, Management Advisory Reports, Investor Alerts and other guidance documents. It also holds regular public meetings where interested parties can provide input into its standard-setting process before finalizing any new rules or revisions to existing ones. Sometimes referred to as the rule maker because it sets rules that companies must follow when preparing their financial statements according to GAAP principles, the FASB plays an important role in ensuring transparency in U.S. markets by providing a common language between accountants, shareholders and company management teams so they can better understand each other’s interests related to how businesses should report their finances accurately and fairly over time. Its mission is ultimately geared towards helping investors make informed decisions about where they put their money based on reliable data from corporate disclosures rather than speculation or guesswork alone.