The Financial Accounting Standards Board (FASB) is a private, nonprofit organization in the United States that establishes and improves accounting standards. It was established in 1973 and is recognized as the designated accounting standard setter for public companies, both for-profit and nonprofit organizations, and state and local government entities. It is comprised of seven accounting professionals who set These standards are known as generally accepted accounting principles (GAAP) and are recognized by the Securities and Exchange Commission, under the authority of which the FASB was created.
The primary responsibility of the FASB is to develop Generally Accepted Accounting Principles (GAAP), which form the foundation of financial accounting and reporting in the United States. GAAP provides a common set of accounting principles and standards that companies must follow when preparing financial statements. These standards ensure consistency, comparability, and transparency in financial reporting, making it easier for investors, creditors, and other stakeholders to analyze and assess financial information.
The FASB operates independently of other professional or governmental organizations and is overseen by the Financial Accounting Foundation (FAF), which appoints the members of the FASB and its advisory councils. The FASB engages in a transparent and inclusive standard-setting process that involves public consultations, exposure drafts, and thorough analysis of the potential impact of new standards on financial reporting.
Over the years, the FASB has issued numerous accounting standards covering various aspects of financial reporting, including revenue recognition, leases, financial instruments, and more. The goal is to adapt to evolving business practices and economic conditions while maintaining the quality and relevance of financial information.
