University of Phoenix
Accounting Theory and Research
Jun 13, 2009
Accounting Standards Board
To address the increasing challenges of legislating those governs our society today, “countries all over the world have begun to outsource rulemaking to bodies consisting of people familiar with the subject. For that reason, policymakers rely on private entities to establish financial accounting and reporting standards” (Donald Kieso, 2003, Intermediate Accounting). The two most influential standard-setters are the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).
FASB & IASB are currently working jointly to establish a single set of universal accounting concepts, standards, and reporting procedures with the goal of implementing standard global accounting practices.
To compile their financial statements companies use a common set of accounting principles named generally accepted accounting principles (GAAP), recognized by the financial community as the standards that over time have proved to be the most useful. One of the most important organizations that contribute in the development of these standards is the Financial Accounting Standards Board (FASB) .From its inception in 1973 the Financial Accounting Standards Board (FASB) has been the organization in the private sector that established and improved standards of financial accounting and reporting for the guidance and education of the public, auditors, and users of financial information .These standards of financial accounting are officially recognized as authoritative by the Securities and Exchange Commission (SEC) and by the American Institute of Certified Public Accountants .According to these standards the accounting information is useful in the decision making process if it meets the two primary qualities of relevance and reliability as well as the two secondary qualities of comparability and consistency.
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