Statement of Financial Accounting Concepts (SFAC)

What Is Statement of Financial Accounting Concepts?

The Statement of Financial Accounting Concepts (SFAC) was a document issued by the Financial Accounting Standards Board (FASB) covering broad financial reporting concepts. FASB is the organization that sets down the accounting rules and rules that make up Generally Accepted Accounting Principles (GAAP).

The purpose of the SFAC document is to give an overall outline of accounting concepts, definitions, and thoughts. It is viewed as an introduction to the Statement of Financial Accounting Standards (SFAS).

Both SFAC and SFAS has been supplanted by the FASB Accounting Standards Codification, which became effective after September 2009. This codification is presently refreshed by means of Accounting Standards Updates (ASUs) and FASB Concept Statements.

Figuring out Statement of Financial Accounting Concepts

Setting accounting standards is a broad interaction begins with research, public hearings, and public comment and finishes with the giving of another accounting standard that then, at that point, turns out to be part of GAAP. The SFAC is part of this cycle in that it is utilized as an outline for the future development of reporting policy and procedures.

In recent years there has been pressure to blend accounting standards around the world. The international equivalent of the US-based FASB is the International Accounting Standards Board (IASB). The IASB creates standards for countries that require the utilization of International Financial Reporting Standards (IFRS).

FASB and IASB initially wanted to foster a common set of standards that sounds acceptable around the world. Be that as it may, this approach experienced some resistance, and they have settled on a compromise in which the FASB will stay the standard issuer for the United States however underwrite IFRS rules and rules issued by IASB.

Statement of Financial Accounting Standards

Statement of Financial Accounting Standards, or SFASs, are closely related documents and were distributed to address specific accounting issues, with the end goal of improving the exactness and transparency of financial reporting. There would frequently be an extended public meeting about the possible results of a rule change before a SFAS was distributed to refresh rules.

When a SFAS was distributed, it turned out to be part of the FASB accounting standards, known as generally accepted accounting principles (GAAP), that administer the readiness of corporate financial reports and are recognized as legitimate by the Securities and Exchange Commission (SEC), which directs American stock exchanges.

Features

• Beginning around 2009, these documents have given way to new issuance of accounting refreshes including Accounting Standards Updates and FASB Concept Statements.
• The goal has been to lay out accounting standards and rules for best practices among accountants, clerks, and organizations planning financial statements.
• The Statement of Financial Accounting Concept (SFAC) was an outline of accounting and financial reporting terms issued by the FASB.