Financial Accounting Standards Board

(noun)

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

Related Terms

Examples of Financial Accounting Standards Board in the following topics:

  • Objectives of Accounting

    • The Financial Accounting Standards Boards Statements of Financial Accounting Concepts No. 1 states the objective of business financial reporting, which is to provide information that is useful for making business and economic decisions.
    • With these objectives in mind, financial accountants produce financial statements based on the accounting standards in a given jurisdiction.
    • These standards may be the generally accepted accounting principles of a respective country, which are typically issued by a national standard setter, or International Financial Reporting Standards, which are issued by the International Accounting Standards Board.
    • Generally Accepted Accounting Principles refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards or Standard accounting practice.
    • Describe the objectives of accounting, distinguishing between Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS)

  • Standard-Setting Groups: SEC, AICPA, and FASB

    • 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.
    • In 1959, the Accounting Principles Board (APB) was formed to meet the demand for more structured accounting standards.
    • The APB issued pronouncements on accounting principles until 1973, when it was replaced by the Financial Accounting Standards Board (FASB).
    • Promote international convergence of accounting standards concurrent with improving the quality of financial reporting.
    • While the AICPA set the professional standards for the professional conduct of accountants, it plays no role in setting the standards for financial accounting.

  • Fundamental Concepts in Accounting

    • In order to prepare the financial statements, it is important to adhere to certain fundamental accounting concepts.
    • Financial statements are prepared according to agreed upon guidelines.
    • The objectives of financial reporting, as discussed in the Financial Accounting standards Board (FASB) Statement of Financial Accounting Concepts No. 1, are to provide information that
    • In order to prepare the financial statements, it is important to adhere to certain fundamental accounting concepts.
    • This is a diagram of details for principles, concepts, and constraints within the field of Financial Accounting.

  • Reasons for a Conceptual Framework

    • Specifically in accounting, the rule and standards set the the nature, function and limits of financial accounting and financial statements.
    • fundamental principles which then do not have to be repeated in accounting standards.
    • Prior to 1929, no group—public or private—was responsible for accounting standards.
    • The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization whose 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. " Created in 1973, FASB replaced the Committee on Accounting Procedure (CAP) and the Accounting Principles Board (APB) of the American Institute of Certified Public Accountants (AICPA).
    • FASB's Conceptual Framework, a project begun in 1973 to develop a sound theoretical basis for the development of accounting standards in the United States.

  • Why an accounting system is important

    • The term they use to describe these two perspectives is financial accounting and managerial accounting.
    • "Financial accountancy is governed by both local and international accounting standards".
    • Also, note that financial accounting reports must be prepared in accordance with national and international accounting standards.
    • In the United States the Financial Accounting Standards Board (FASB) has been the designated independent entity for established accounting reporting standards since 1973.
    • Since so many organizations are global in scope, a relatively new entity, the International Accounting Standards Board (IASB) has come upon the scene.

  • Introduction to GAAP

    • Generally Accepted Accounting Principles (GAAP) is the standard framework for financial accounting used in any given jurisdiction.
    • Generally Accepted Accounting Principles (GAAP) refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards.
    • GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing accounting transactions, and in the preparation of financial statements.
    • Currently, the Financial Accounting Standards Board (FASB) establishes generally accepted accounting principles for public and private companies, as well as for non-profit organizations.
    • In 1973, the Accounting Principles Board was replaced by the FASB under the supervision of the Financial Accounting Foundation with the Financial Accounting Standards Advisory Council serving to advise and provide input on the accounting standards.

  • Limitations of Financial Statements

    • Financial statements can be limited by intentional manipulation, differences in accounting methods, and a sole focus on economic measures.
    • High-profile cases in which management manipulated figures in financial statements to indicate inflated economic performance highlighted the need to review the effectiveness of accounting standards, auditing regulations, and corporate governance principles.
    • Another set of limitations of financial statements arises from different ways of accounting for activities across time periods and across companies.
    • However, the Generally Accepted Accounting Principles (GAAP), a set of guidelines and rules, are one means by which uniformity and comparability between financial statements is improved.
    • Recently there has been a push toward standardizing accounting rules made by the International Accounting Standards Board (IASB).

  • Disadvantages of LIFO

    • LIFO is facing pressures from international standards boards that may result in its possible complete elimination.
    • LIFO is facing pressures from both the International Reporting Standards Board in cooperation with the SEC and the U.S.
    • On November 15, 2007, the Securities and Exchange Commission (SEC) exempted foreign firms from including reconciliation from International Financial Reporting Standards (IFRS) to U.S.
    • Foreign public firms are now permitted to file using the International Financial Reporting Standards (IFRS) without reconciliation to U.S.
    • On June, 18, 2008, the SEC issued a press release stating that the world’s securities regulators are uniting to increase their oversight of international accounting standards.

  • Social Responsibility Audits

    • As with financial audits, social responsibility audits involve accounting processes.
    • This type of accounting originated in the early 1990s and is known by various names, including social accounting, sustainability accounting, CSR reporting, environmental and social governance (ESG) reporting, and triple-bottom-line accounting (encompassing social and environmental as well as financial reporting).
    • In consequence, most social, environmental, and sustainability reports are produced voluntarily by corporations themselves and are not held to the same legal standards as financial reporting, for example.
    • The lack of clearly defined standards makes social audits different from financial audits, for which there are generally accepted standards.
    • An audit for economic and governance responsibilities might look at transparency and the use of practices such as independent board members and separation of the roles of CEO and board chairman.

  • Sarbanes–Oxley Act of 2002

    • The Sarbanes–Oxley Act is a US federal law enhancing standards for all US public company boards, management and public accounting firms.
    • The Sarbanes–Oxley Act of 2002 is a United States federal law that set new or enhanced standards for all U.S. public company boards, management and public accounting firms.
    • Also, SOX increased the oversight role of boards of directors while also increasing the independence of outside auditors who review the accuracy of corporate financial statements.
    • Title I consists of nine sections and establishes the Public Company Accounting Oversight Board, providing independent oversight of public accounting firms.
    • SOX is a United States federal law that set new or enhanced standards for all U.S. public company boards, management and public accounting firms.