Fasb and the Standard-Setting Process

Topics: Financial statements, Standardization, International Financial Reporting Standards Pages: 4 (1208 words) Published: April 24, 2011
Running Header: THE FASB

FASB and the Standard-Setting process






Financial Accounting Standards Board (FASB) is a seven member board that consists of accounting professionals who establishes and communicates financial accounting and reporting standards known as generally accepted accounting principles (GAAP) in United States. The standards’ quest is to govern the preparation of the corporate financial reports and hence ensuring transparency, credibility and understandability of the financial statements. To achieve these, there is need to set guidelines that create uniformity in the preparation of the statements across the region. In this paper, we will focus on the FASB’s standard setting process and define the authoritative sources of accounting information that the board refers in setting the standards. More importantly, we are going to describe the general objectives of the financial reporting and the role of ethics in the statements’ reporting.

FASB and the Standard-Setting process
FASB standard setting process and the related personalities in the setting process
To start with, at the inception of setting the GAAP standards, the board engages the users of the financial statements as the investors and the creditors so as to create an understanding of their perspectives in relation to the intended standards. The users are then informed and educated on the proposed standards as their argument on possible effects on the financial reporting is considered. The collaborative involvement of these participants in the due process is mainly to input their criticisms and diverse opinions in the standard setting process so as to increase the validity of the standards. The other individuals whose opinions have to be considered include; the accounting analysts, portfolio managers and agency analysts in credit rating.

After including all these participants, a financial reporting area that needs an...

References: Smith, C. (2010). An overview of outreach provided through meeting and teleconferences with users of financial statements for the FASB’s accounting for financial instruments proposal. Retrieved March 26, 2011 from http://www.
Mann, T. (2006). Accounting Ethics. Retrieved March 27, 2011 from http://www.
Bissett, J. & Heinen, M. (2002). Reference from coast to coast – Accounting Information Sources for the legal Researcher. Retrieved March 26, 2011 from http:// www. llrx.com/columns/reference35.htm
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