Who are better able to represent the public free of

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who are better able to represent the public free of any conflict of interest. Hesuggested that the SEC should approve the appointments to the FAF.18To datethere has been no change in the method of appointing FAF members, and changesin the structure of either the FAF or the FASB are likely to be evolutionary.FIGURE 1.1Structure of the FASB
Section 108 of Sarbanes–Oxley established criteria that must be met in order forthe work product of an accounting standard-setting body to be recognized as“generally accepted.” The SEC responded by issuing a policy statement statingthat the FASB and its parent organization, the FAF, satisfy the criteria in Section108 of the Sarbanes–Oxley Act and, accordingly, the FASB's financial accountingand reporting standards are recognized as “generally accepted” for purposes ofthe federal securities laws.19Consequently, the FASB is the organization havingthe authority to issue standards for financial accounting. Thus, throughout thisbook, pronouncements of the FASB and those of its predecessor organizations notsuperseded or amended are presented as GAAP.The Mission of the FASBThe FASB's mission is to establish and improve standards of financial accountingand reporting for the guidance and education of the public, including issuers,
auditors, and users of financial information. In attempting to accomplish thismission, the FASB seeks to1.Improve the usefulness of financial reporting by focusing on the primarycharacteristics of relevance and faithful representation and on the qualitiesof comparability and consistency (discussed inChapter 2)2.Keep standards current to reflect changes in methods of doing business andchanges in the economic environment3.Consider promptly any significant areas of deficiency in financial reportingthat might be improved through the standard-setting process4.Promote the international comparability of accounting standards concurrentwith improving the quality of financial reporting5.Improve the common understanding of the nature and purposes ofinformation contained in financial reportsTypes of PronouncementsOriginally, the FASB issued two types of pronouncements,Statements of FinancialAccounting Standards(SFASs) andInterpretations. Subsequently, the FASBestablished two new series of releases:Statements of Financial AccountingConcepts(SFACs) andTechnical Bulletins.SFASs conveyed required accountingmethods and procedures for specific accounting issues and officially createdGAAP. Interpretationswere modifications or extensions of issuespronouncements. SFACs are intended to establish the objectives and conceptsthat the FASB will use in developing standards of financial accounting andreporting. To date, the FASB has issued eightSFACs, which are discussed indepth inChapters 2,6, and7.SFACs differed fromSFASs in that they did notestablish GAAP. Similarly, they are not intended to invoke Rule 203 of the Rules ofConduct of the Code of Professional Ethics. It is anticipated that the majorbeneficiary of theseSFAC

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Term
Spring
Professor
Dacanay
Tags
Accounting, Financial Accounting, Financial Accounting Standards Board

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