Financial Accounting Standards Board

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Financial Accounting Standards Board Ronny Wagner ACC 201 Principles of Financial Accounting Prof. Kimberly Byrd March 18, 2012 Financial Accounting Standards Board In 1973, based on the recommendation of the Wheat Commission, the FASB was formed to solve the weaknesses of the Accounting Principles Board (APB) which replaced CAP, the Committee on Accounting Procedures (Giroux, n.d.). CAP was a committee of the American Institute of Accountants (AIA) and from 1938 to 1959 issued 51 Accounting Research Bulletins which dealt with the specific accounting and reporting problems. Since there was no framework for financial accounting, dealing with individual issues without a framework led to stern criticism of the accounting profession. In 1959, the Accounting Professionals Board (APB) replaced CAP and operated from 1959 through 1973 and issued 31 Accounting Principle Board Opinions, various Interpretations, and four Statements. The Opinions also dealt with specific accounting and reporting problems. The APB’s main objective was to establish a framework for financial accounting and reporting, but their framework (APB Statement No. 4), “Basic Concepts and Accounting Principles Underlying Financial Statements of Business Enterprises” was not successful. Criticism of the APB led to the creation of the Financial Accounting Standards Board (FASB) and its supporting structure (Online Learning Center, 2007). Since then, the FASB has been the designated organization in the private sector for establishing the standards of financial accounting. These standards govern the preparation of financial reports by nongovernmental entities. They are officially recognized as authoritative by the Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants (AICPA) to establish financial accounting and reporting standards for publicly

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