Abuses iii wheat committee group examined the

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Accounting
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Chapter 2 / Exercise 2-1
Accounting
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abuses iii. Wheat Committee- Group examined the organization and operation of the APB and determined the necessary changes to attain better results 3. Financial Accounting Standards Board (FASB)- Replaces (APB) a. Organization Structure for Setting Accounting Standards 1. Financial Accounting Foundation (FAF)- i. Select members of the FASB and GASB, and their Advisory Councils, Fund their activities, and exercise general oversight 2. Financial Accounting Standards Board (FASB)- i. To establish and improve standards of financial accounting and reporting for the guidance and education of the public including, 1. Issuers 2. Auditors 3. Users of financial information ii. Staff and Task Forces 1. Assist board on reporting issues by performing research analysis and writing functions 3. Financial Accounting Standard Advisory Council (FASAC) i. Consult on major policy issues, technical issues, project priorities, and selection and organizations of task force b. Due Process- 1. Due Process System of FASB i. Topics identified and placed on Board’s agenda ii. Research and analysis conducted and preliminary views of pros and cons issued iii. Public hearing on proposed standard
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Accounting
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Chapter 2 / Exercise 2-1
Accounting
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iv. Board evaluates research and public response and issues exposure drafts v. Board evaluates responses and changes exposure draft. Final standard issued ( GAAP) 2. FASB relies on two premises i. FASB should be responsive to the needs and viewpoints of the entire economic community, not just public accountants ii. Should operate in full view of the public through a “Due Process” system that gives interested persons’ ample opportunities to make their views known 3. Passage of new guidance requires support of four of the seven members 4. Types of Pronouncements i. Accounting Standards Updates 1. Each update explains how the Codification has been amended 2. Emerging Issues Task Force (EITF) Reach consensus on how to account for new and unusual financial transactions that may potentially create differing financial reporting practices Provides timely guidance for the accounting for loans and investments in the wake of the credit crisis Problem Filter Deals with short-term emerging issues ii. Financial Accounting Concepts 1. Statements of Financial Accounting Concepts- Sets forth fundamental objectives and concepts that board uses in developing future standards 2. Forms a cohesive set of interrelated concepts-a conceptual framework-that will serve as a tool for solving existing and emerging problems 3. Statement of Financial Accounting Concepts DOES NOT establish GAAP
Conceptual Framework for Financial Reporting: I. Conceptual Framework- Coherent system of concepts that flow from an objective (Purpose of financial reporting) that underlie financial reporting A. Other concepts provide guidance on: 1.

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