Financial Accounting Standards Board

Business, Legal & Accounting Glossary

Definition: Financial Accounting Standards Board


Quick Summary of Financial Accounting Standards Board


Since 1973, the Financial Accounting Standards Board (FASB) has had primary responsibility for establishing financial accounting and reporting standards for the private sector in the United States. The pronouncements of the Financial Accounting Standards Board are considered authoritative by both the Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants (AICPA). Thus the work of the Financial Accounting Standards Board is a cornerstone of Generally Accepted Accounting Principles (GAAP). An important component of the Financial Accounting Standards Board is its Emerging Issues Task Force, which is charged with identifying important issues that the Financial Accounting Standards Board needs to consider. The Financial Accounting Standards Board has seven full-time members, who are required to cut all ties to the firms or organizations they previously served. The Financial Accounting Standards Board is also assisted by about 70 professional employees. Despite its apparent independence and professional support, the Financial Accounting Standards Board receives substantial criticism from legislators, executives, and business critics. But given the controversial issues, the Financial Accounting Standards Board decides, criticism may be impossible to avoid.




Full Definition of Financial Accounting Standards Board


The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principles (GAAP) within the United States in the public’s interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. It was created in 1973, replacing the Accounting Principles Board and the Committee on Accounting Procedure of the American Institute of Certified Public Accountants. The FASB’s mission is “to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information.”

Description

The FASB is not a governmental body. The SEC has statutory authority to establish financial accounting and reporting standards for publicly held companies under the Securities Exchange Act of 1934. Throughout its history, however, the Commission’s policy has been to rely on the private sector for this function to the extent that the private sector demonstrates the ability to fulfil the responsibility in the public interest.

The FASB is part of a structure that is independent of all other business and professional organizations. Before the present structure was created, financial accounting and reporting standards were established first by the Committee on Accounting Procedure of the American Institute of Certified Public Accountants (1936–1959) and then by the Accounting Principles Board, also a part of the AICPA (1959–73). Pronouncements of those predecessor bodies remain in force unless amended or superseded by the FASB.

The FASB is subject to oversight by the Financial Accounting Foundation (FAF), which selects the members of the FASB and GASB and funds both organizations. The Board of Trustees of the FAF, in turn, is selected in part by a group of organizations including:

  • American Accounting Association
  • American Institute of Certified Public Accountants
  • CFA Institute
  • Financial Executives International
  • Government Finance Officers Association
  • Institute of Management Accountants
  • National Association of State Auditors, Comptrollers and Treasurers
  • Securities Industry Association

Synonyms For Financial Accounting Standards Board


FASB

Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/financial-accounting-standards-board/
Modern Language Association (MLA):
Financial Accounting Standards Board. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 22, 2021 https://payrollheaven.com/define/financial-accounting-standards-board/.
Chicago Manual of Style (CMS):
Financial Accounting Standards Board. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/financial-accounting-standards-board/ (accessed: September 22, 2021).
American Psychological Association (APA):
Financial Accounting Standards Board. PayrollHeaven.com. Retrieved September 22, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/financial-accounting-standards-board/

Definition Sources


Definitions for Financial Accounting Standards Board are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 23rd April, 2020 | 7 Views.