Tuesday, February 24, 2009

FASB - Financial Accounting Standards Board

FASB stands for the Financial Accounting Standards Board. This is an important non-profit organization run by seven members which establish standards and rules that govern accounting and financial reporting in the United States. The ten step process FASB uses in determining statements and interpretations is as follows:

1) Introduction of topic or project on the FASB agenda
2) Research and analysis of the problem
3) Issuance of a discussion memorandum
4) Public hearings
5) Board analysis and evaluation
6) Issuance of an exposure draft
7) Period for public comment
8) Review of public response, revision
9) Issuance of Statements of Financial Accounting Standards
10) Amendments and interpretations, as needed
(Steps taken "Understanding Financial Statements" by Lyn Faser and Aileen Ormiston)

FASB's role in creating accounting standards can be an important public issue as well as a matter of private business. The rules sets by the FASB provide a measure of standardization and transparency that should help investors in determining the value of a firm. The FASB may soon be asked to look into whether or not to suspend a Mark-To-Market system of accounting. This could have vast implications regarding how firms account for their assets, since they currently value them based on what those assets would currently fetch in the market.

Visit the FASB website to learn more about this organization.

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