Financial Accounting Standards Board (FASB)

What Is the Financial Accounting Standards Board (FASB)?

The Financial Accounting Standards Board (FASB) is an independent nonprofit organization responsible for laying out accounting and financial reporting standards for companies and nonprofit organizations in the United States, following generally accepted accounting principles (GAAP). The FASB was framed in 1973 to succeed the Accounting Principles Board and carry on its mission. It is situated in Norwalk, Conn.

How the Financial Accounting Standards Board (FASB) Works

The Financial Accounting Standards Board has the authority to lay out and decipher generally accepted accounting principles (GAAP) in the United States for public and private companies and nonprofit organizations. GAAP is a set of standards that companies, nonprofits, and legislatures ought to follow while getting ready and introducing their financial statements, including any related party transactions.

The Securities and Exchange Commission (SEC) perceives the FASB as the accounting standard setter for public companies. It is additionally recognized by state accounting boards, the American Institute of Certified Public Accountants (AICPA), and different organizations in the field.

The Financial Accounting Standards Board is part of a bigger, independent nonprofit group that likewise incorporates the Financial Accounting Foundation (FAF), the Financial Accounting Standards Advisory Council (FASAC), the Governmental Accounting Standards Board (GASB), and the Governmental Accounting Standards Advisory Council (GASAC).

The GASB, which is comparable in function to the FASB, was laid out in 1984 to set accounting and financial reporting standards for state and nearby legislatures across the United States. The FAF administers both the FASB and the GASB. The two advisory councils give guidance in their particular areas.

Altogether, the organizations' mission is to work on financial accounting and reporting standards with the goal that the data is helpful to investors and different users of financial reports. The organizations additionally teach partners on the best way to comprehend and execute the standards most successfully.

The FASB is represented by seven full-time board individuals, who are required to cut off their connections to the companies or their employers before joining the board. Board individuals are designated by the FAF's board of trustees for five-year terms and may serve for as long as 10 years.

In 2009, the FAF sent off the FASB Accounting Standards Codification, an online research device planned as a single source for legitimate, nongovernmental, generally accepted accounting principles in the United States. As indicated by the FAF, the device "revamps the a great many U.S. GAAP proclamations into around 90 accounting subjects and shows all points utilizing a predictable structure." The website likewise gives significant Securities and Exchange Commission (SEC) guidance on those points. A "fundamental view" rendition is free, while the more thorough "proficient view" is accessible by paid subscription.

FASB versus IASB

The London-based International Accounting Standards Board (IASB), established in 2001 to supplant a more seasoned standards organization, is responsible for the International Financial Reporting Standards (IFRS), which are presently utilized in numerous countries all through the world. In recent years, the FASB has been working with the IASB on an initiative to worldwide work on financial reporting and the equivalence of financial reports.

Features

• A connected organization, the Governmental Accounting Standards Board (GASB), sets rules for state and nearby legislatures.
• The Financial Accounting Standards Board (FASB) sets accounting rules for public and private companies and nonprofits in the United States.
• In recent years, the FASB has been working with the International Accounting Standards Board (IASB) to lay out viable standards worldwide.