Financial Accounting Standards Board

The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. S-Ox provided for funding through support fees assessed against issuers of securities.(15) While subscriptions and publications provide about one-third of FAF revenues, the substantial majority comes from support fees. This has freed the FAF from its fundraising efforts and helped further assure the Board’s independence from the preparer and audit communities.

The charter gives the FASB exclusive authority to set its own agenda and establish accounting standards. The London-based International Accounting Standards Board (IASB), founded in 2001 to replace an older standards organization, is responsible for the International Financial Reporting Standards (IFRS), which are now used in many countries throughout the world. In recent years, the FASB has been working with the IASB on an initiative to improve financial reporting and the comparability of financial reports globally. Those standards began to be developed by the APB, which was charged with creating guidelines for accounting and issuing pronouncements related to accounting theory and practice. Its membership consisted of between 18 and 21 representatives of accounting firms, corporate executives, and academics. The FASB has a professional staff of approximately forty-five persons; once a project is added to the agenda, staff members are assigned to begin research on the topic.

GAAP is a set of standards that companies, nonprofits, and governments should follow when preparing and presenting their financial statements, including any related party transactions. While the APB was ultimately replaced by the FASB, its contributions to the development of accounting standards should not be underestimated. The APB played a crucial role in the early efforts to standardize accounting practices, and its work laid the groundwork for the more structured and authoritative approach of the FASB. Today’s financial reporting landscape is built upon the foundation established by the APB and its commitment to improving accounting practices in the United States. Accordingly, any views so expressed are those of the author and do not necessarily reflect the views of the Standards Board.) may be shortened to as few as 30 days when the Board believes that sufficient information is available to enable it to proceed quickly.

AICPA’s GAAP agreement

The FASB is governed by seven full-time board members, who are required to sever their ties to the companies or organizations they work for before joining the board. Board members are appointed by the FAF’s board of trustees for five-year terms and may serve for up to 10 years. Realizing the need to reform the APB, leaders in the accounting profession appointed a Study Group on the Establishment of Accounting Principles (commonly known as the Wheat Committee for its chairman Francis Wheat). This group determined that the APB must be dissolved and a new standard-setting structure created.

It also published opinions on disclosure of accounting policies and reporting interim financial data and the results of discontinued operations. The APB itself was a successor organization to the Committee on Accounting Procedure, a group that first attempted to create and impose a set of standards for financial reporting. Virtually all public corporations that operate in the U.S. follow the GAAP standards, which make it easier for investors and auditors to review financial statements and compare one company’s results to those of others. Among the 31 opinions that the APB issued during its existence were ones related to accounting for leases, income taxes, business combinations, intangibles, stock issued to employees for compensation, early extinguishment of debt. It also published opinions on disclosure of accounting policies and reporting interim financial data and results of discontinued operations. Many of the accounting principles established by the APB remain in use today, either in their original form or as modified by the FASB.

It was replaced in the early 1970s by FASB, a private, non-profit organization led by seven full-time board members. The Financial Accounting Standards Board (FASB) publishes and maintains the Accounting Standards Codification (ASC), which is the single source of authoritative nongovernmental U.S. (15) Section 978 of The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 provided for similar accounting support fees for the GASB, expected to begin in 2012. Other influential organizations include the Government Finance Officer’s Association (GFOA), American Accounting Association, Institute of Management Accountants, and Financial Executives Institute. While FASB proposals were often controversial, the FAF itself occasionally was embroiled in controversy.

Derivative accounting

1. Such a document analyzes the problem in depth, delineates the issues, identifies alternative solutions, and discusses the merits of those solutions in an objective way.
2. Although independence can never be totally assured, the FASB charter did attempt to protect the board from as much external pressure as possible.
3. The ARBs and APB Opinions were considered authoritative guidance for accountants and auditors, and their goal was to improve financial reporting by establishing uniform accounting principles.
4. (15) Section 978 of The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 provided for similar accounting support fees for the GASB, expected to begin in 2012.
5. Some of the most significant APB publications include ARB No. 43, which provided guidance on inventory valuation, and APB Opinion No. 17, which addressed accounting for leases.

It is responsible for selecting members of the FASB, raising money to fund the FASB’s operations, and providing general oversight of the FASB to assure that it is performing its mission. The foundation is composed of a sixteen-member board of trustees that represent the majority of the groups interested in, or affected by, the accounting standard-setting process. Largely as a result of criticisms concerning the perceived lack of independence of the APB and the part-time involvement of its members, a major reconsideration of the standard-setting structure in the United States occurred in the early 1970s. This led to the creation in 1973 of a new standard-setting body designed to be independent of all other business and professional organizations.

1. Although the federal government’s Securities and Exchange Commission (SEC) has the legal authority to establish accounting standards for public companies, the SEC has historically looked to the private sector to set accounting standards.
2. Board members are appointed by the FAF’s board of trustees for five-year terms and may serve for up to 10 years.
3. This led to the creation in 1973 of a new standard-setting body designed to be independent of all other business and professional organizations.
4. Alternatively, the board may issue what is known as a Preliminary Views document, which includes tentative decisions on a few basic issues and again seeks input from constituents.
5. A “basic view” version is free, while the more comprehensive “professional view” is available by paid subscription.

Accounting History, The Accounting Historian, And The Fasb

Although the federal government’s Securities and Exchange Commission (SEC) has the legal authority to establish accounting standards for public companies, the SEC has historically looked to the private sector to set accounting standards. The GASB, which is similar in function to the FASB, was established in 1984 to set accounting and financial reporting standards for state and local governments across the United States. The Financial Accounting Standards Board (FASB) is a private standard-setting body1 whose primary purpose is to establish and improve 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. The FASB replaced the American Institute of Certified Public Accountants’ (AICPA) Accounting Principles Board (APB) on July 1, 1973. The APB served an important role in its time, laying the foundation for GAAP, the set of accounting standards and procedures that are intended to ensure consistency, transparency, and integrity in U.S. corporate financial statements.

In response, the AICPA established the Wheat Committee in 1971 to study the existing standard-setting process and recommend changes. The Wheat Committee’s recommendations led to the creation of the Financial Accounting Standards Board (FASB) in 1973, which replaced the APB. Despite disagreement over some specific pronouncements, the board’s various constituents remain generally supportive. They know that their views are carefully weighed during the FASB’s deliberations, but they also recognize that the ultimate determinant of a new standard must be the board’s judgment. As the FASB’s mission statement states, “The FASB is committed to following an open orderly process for standard setting that precludes placing any particular interest above the interests of the many who rely on financial information.” In 1939, urged by the SEC, the American Institute of Certified Public Accountants (AICPA) appointed the Committee on Accounting Procedure (CAP).

Accounting Principles Board definition

Policy making is more than a polarized process in which a decision of “for or against” is reached. The accounting historian should seek an under standing of the “political” considerations involved in the establishment of a financial accounting standard and the particular alternatives and more subtle points that were considered during the deliberations. The APB was created in 1959 by the American Institute of Certified Public Accountants (AICPA) as a successor to the Committee on Accounting Procedure (CAP). The CAP, which had been in existence since 1939, was dissolved due to concerns about its lack of formal standard-setting procedures and the perceived need for a more authoritative body to govern accounting principles.

Convergence to international comparability

The United States Securities and Exchange Commission (SEC) was created as a result of the Great Depression. The SEC encouraged the establishment of private standard-setting bodies through the AICPA and later the FASB, believing that the private sector had the proper knowledge, resources, and talents. Currently, the SEC works closely with various private organizations setting GAAP, but does not set GAAP itself. During its existence, the APB issued 31 Accounting Research Bulletins (ARBs) and in 1973 fasb was replaced with four APB Opinions.

During 1939 to 1959 CAP issued 51 Accounting Research Bulletins that dealt with a variety of timely accounting problems. However, this problem-by-problem approach failed to develop the much needed structured body of accounting principles. Thus, in 1959, the AICPA created the Accounting Principles Board (APB), whose mission it was to develop an overall conceptual framework. Collectively, the organization’s mission is to improve nonprofit financial accounting and reporting standards so that the information is useful to investors and other users of financial reports. The organizations also educate stakeholders on how to understand and implement the standards most effectively. The APB issued 31 opinions during its brief existence, including guidelines related to accounting for leases, income taxes, business combinations, intangibles, stock issued to employees for compensation, and early extinguishment of debt.

It is also possible for the discussion memorandum and public hearings to be eliminated entirely. For those projects in which a discussion memorandum is issued and the complete “due process” cycle is followed, historical studies pertaining to the problem that are available during the period that the FASB staff is preparing a memorandum could be very useful. Since a discussion memorandum is oriented to decision issues, an historical study that focuses on the relevant issues raised in the past and which analyzes past reporting practices could be of assistance in framing current issues.