The Fasb Essay

1155 WordsDec 14, 20135 Pages
The FASB Jennifer Crawford AAC305 Intermediate Accounting I Instructor: Brenda Forde November 11, 2013 The FASB The crash of the United States stock market led to the economic depression known as “the Great depression, in 1929 [ (Hollein, 2013) ]. At that time, steps were taken to ensure that this sort of domino effect would never happen again. Several regulatory bodies were created, including the Securities and Exchange Commission (SEC) that enforces the Generally Accepted Accounting Principles (GAAP) and other laws, the Financial Accounting Standards Board (FASB) which creates these rules and regulation, and the Government Accounting Standards Board (GASB) which ensures that the government is following the rules and regulations too [ (Economist, 2010) ]. The FASB has been the designate organization in the private sector for establishing standards of financial accounting that governs the preparation of financial reports by non governmental entities [ (FASB, 2010) ]. These standards are important to the efficient functioning of the economy because decisions about the allocation of resources rely heavily on credible, concise, and understandable financial information [ (FASB, 2010) ]. The FASB has published rules and clarifications on how accounting should be done in the United States [ (FASB, 2010) ]. The FASB does not govern accounting ethics. Its purpose is to govern the fundamentals of how accounting is conducted [ (FASB, 2010) ]. The FASB states that there are four characteristics that make up accounting principles; relevance, reliability, comparability, and consistency [ (FASB, 2010) ]. Their mission statement 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 [ (FASB, 2010) ].”

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