The FASB: Policies and Procedures
In 1973, the Securities and Exchange Commission (SEC) appointed the Financial Accounting Standards Board (FASB) to take over the development of the Generally Accepted Accounting Principles (GAAP); the GAAP is a set of guidelines for accountants to use and follow in the United States. The Generally Accepted Accounting Principles were developed to protect companies, investors, and shareholders, in the accounting section of a business. The principles were set up so that companies would be held responsible for the way they reported their financial activities. The GAAP guidelines include specific rules in regard to: regarding full disclosures of all finances, periodicity, prudence, non-compensation of debts or costs with assets and revenue, permanence of a company’s methods, consistency, sincerity, and regularity (Who, 2011).
The American Institute of Certified Public Accountants (AICPA) is a group of Certified Public Accountants that originally set up and was in charge of the guidelines that accountants must use. The Committee on Accounting Procedure (1936-1959) was at this time in charge of defining the accounting principles for the AICPA. This committee was replaced by the Accounting Principles Board in 1959, and was in charge of all rules and guidelines until 1973, when the Financial Accounting Standards Board was established.
The Financial Accounting Standards Board is overseen by the Financial Accounting Association. The main purpose of the Financial Accounting Standards Board being set up was that the Security Exchange Commission thought that because the board was a non-profit and smaller board that they would be able to develop accounting principles that would be more effective for the public accountants, shareholders and the general public (Who, 2011).
The mission of the Financial Accounting Standards... [continues]
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