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Unformatted text preview: Chapter 1 Introduction to Financial Reporting TO THE NET 1. a. he Mission of the Financial Accounting Standard Board (In Part) The mission of the Financial Accounting Standards Board (FASB)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. Accounting standards are essential to the efficient functioning of the economy because decisions about the allocation of resources rely heavily on credible, concise, transparent and understandable financial information. Financial information about the operations and financial position of individual entities also is used by the public in making various other kinds of decisions. To accomplish its mission, the FASB acts to: • Improve the usefulness of financial reporting by focusing on the primary characteristics of relevance and reliability and on the qualities of comparability and constancy; • Keep standards current to reflect changes in methods of doing business and changes in the economic environment; • Consider promptly any significant areas of deficiency in financial reporting that might be improved through the standard-setting process; • Promote the international convergence of accounting standards concurrent with improving the quality of financial reporting; and • Improve the common understanding of the nature and purposes of information contained in financial reports. b Financial Accounting Standards Advisory Council 1 An Overview The Financial Accounting Standards Advisory Council, FASAC or “the Council” for short, was formed in 1973 concurrent with the establishment of the Financial Accounting Standards Board (the FASB or the Board). The primary function of FASAC is to advise the Board on issues related to projects on the Board’s agenda, possible new agenda items, project priorities, procedural matters that may require the attention of the FASB, and other matters as requested by the chairman of the FASB. FASAC meetings provide the Board with an opportunity to obtain and discuss the views of a very diverse group of individuals from varied business and professional backgrounds. The members of FASAC are drawn from the ranks of CEOs, CFOs, senior partners of public accounting firms, executive directors of professional organizations, and senior members of the academic and analyst communities, all disclosure. Carrying Out the Mission It is the job of the FASB to establish the “generally accepted accounting principles,” or GAAP, to which public financial reporting by U.S. corporations must conform and to keep those principles current. In conducting its activities, the Board strives to carefully weight the views of its users, preparers, and auditors of financial report. The Council provides an important sounding board to help the FASB understand what constituents are thinking about a wide range of issues....
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- Spring '11