Fasb

Financial Accounting Standards Board

Anonymous

ACC201: Principles of Financial Accounting

Instructor: Cynthia Ripa

April 2011

Financial Accounting Standards Board

When it comes to money that is circulated throughout a business or an organization, one has to wonder what accounting standards and improvements are being made. “Accounting standards are needed so that financial statements will fairly and consistently describe financial performance. Without standards, users of financial statements would need to learn the accounting rules of each company, and comparisons between companies would be difficult” (QuickMBA, 2010). Because accounting standards are important, it is important for one to understand the mission of the Financial Accounting Standards Board (FASB), as well as, how they are organized, how they function, and who grants the authority of FASB to issue accounting standards.

The overall mission of FASB is to establish and improve standards of financial accounting. In doing this, the reporting process that is fostered by financial reporting by nongovernmental entities will also have established and improved standards. The standards will provide decision-useful information to users of financial reports, and to investors alike. The mission of FASB is achieved with the help of a “comprehensive and independent process that encourages broad participation, objectively considers all stakeholder views, and is subject to oversight by the Financial Accounting Foundation’s Board of Trustees” (FASB, n.d.).

The FASB is responsible for constituting, updating, explaining, and publishing both the broad principles and the specific practices that outline acceptable private-sector financial accounting. They operate through a series of actions, such as research projects, public hearings, discussion memos, and proposal drafts. The FASB’s structure is made up of the Financial Accounting Foundation (Foundation), the FASB, the Financial Accounting Standards Advisory...