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Accounting Terms > FASB

FASB – FASB stands for Financial Accounting Standards Board. It is a nonprofit association based in the United States, whose principle purpose is to create generally accepted accounting principles (GAAP). It was started in 1973, and it replaced the Committee on Accounting Procedure (CAP) and the Accounting Principles Board (APB), which were controlled by the American Institute of Certified Public Accountants (AICPA).

It is responsible for establishing the accounting standards for all public companies in the U.S., and its power to do this comes from the Securities and Exchange Commission (SEC). Its mission is “to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information”. FASB has five goals that it attempts to achieve when developing GAAP, and they are the following.

A) Keep standards current to reflect changes in methods of doing business and in the economy.

B) Consider promptly any significant areas of deficiency in financial reporting that might be improved through standard setting.

C) Improve the usefulness of financial reporting by focusing on the primary characteristics of relevance and reliability, and on the qualities of comparability and consistency.

D) Improve common understanding of the nature and purposes of information in financial reports.

E) Promote international convergence of accounting standards concurrent with improving the quality of financial reporting.