Fasb Financial Crisis

In September 2002 the IASB and the FASB agreed to work together, in consultation with other national and regional bodies, to remove the differences between international standards and US GAAP. (Dorata, 2008) However, the convergence of IFRS and FASB is coming to the end. (Golden, 2013)

In 1973 the Financial Accounting Standards Board (FASB) was established to set the financial accounting standards in the United States of America for nongovernmental entities. These standards are collectively called U.S. Generally accepted Accounting Principles, or U.S. GAAP. The Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants acknowledge the authority of these standards (FASB, n.d). A “proven, independent due process” is used to collect the viewpoints of the financial statements prepares and users for the constant improvement of these standards. An Accounting Status Update(ASU) is not an authoritative source however documents the amendments to communicate the changes in the FASB Codification for a user to understand the reason and future of those changes (FASB, n.d).

In 1973, the Financial Accounting Standards Board (FASB) was created and their 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.org, 2009a). The FASB is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principles (GAAP) within the United States. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. Therefore, the FASB plays a vital and important role in protecting the financial well being and the overall stability of our

Financial Crisis of 2007-2008 originated in the United States spread to the financial systems of many other countries, including CIS countries, by means of the domino effect. Bankruptcy of one of the largest Americans Bank, Lehman Brothers Holdings PLC, in someway was a launcher of this global crisis the scope of that can be compared with the Great Depression of the 30s of the last century. No one could have even believed that a crisis in the local market of subprime mortgage loans in the USA would have such enormous affect on the financial systems over the world and crash banking sectors of many countries one by one.

Countrywide Financial, co-founded in 1969 by Angelo Mozilo and David Loeb became the largest provider of home loans in the U.S., where one out of every six loans originated with Countrywide (Olster, 2010). Countrywide found its niche providing loans to minorities, those with less than stellar credit, and by issuing loans to low income families. Numerous families, unable to achieve the American dream, had the capability of becoming home owners, because Countrywide diminished the barriers preventing this group from obtaining home ownership (Ferrell, Fraedrich, & Ferrell, 2013).

Research: The Financial Accounting Standards Board (FASB) was founded in 1973 as a private and independent organization governed by the Securities Exchange Commission (SEC). The organization’s primary purpose is to establish the rules and standards of Generally Accepted Accounting Principles (GAAP) for the interest of the public. (“Facts about FASB”) “Since its inception in 1973, the FASB has issued 168 Statements of Financial Accounting Standards and a series of concepts statements”. (Facts about FASB, n.d.) The FASB's mission is "to establish and improve standards of financial accounting and reporting for the guidance and education of the public,

Fast forward to 1970, where the APB’s main contribution “Basic Concepts and Accounting Principles Underlying Financial Statement of Business Enterprises was highly critized for achieving too little too late. Ultimately, resulting in the AICPA suggesting that the standard setting role be turned over to an autonomous body known as the Financial Accounting Standards Board

The FASB mission is to “establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernment entities that provides decision- useful information to investors and other users of financial reports.” (www.FASB.org)

Throughout the years, different events occurred and influenced the global economy positively or negatively. For example, the oil crisis in the ‘70s negatively affected the economy just as bad as the Gulf War did in 1990. On the other side, the end of other wars had a positive effect on the economy, for example World War 2, which boosted the stock market and ended the Great Depression. When multiple negative effects occur at the same time, or when crises last for a long time allowing other negative effects to surface, crises tend to last longer and prevent a pick-up in growth.

In the 1970’s, the SEC and the FASB were considering making accounting and financing regulations more important in the business

The U.S. withstood a nearly extraordinary arrangement of stuns in the years from 2000 through 2011. The rundown of catastrophes is extraordinary to the point that it merits rehashing, only for accentuation. The 2000s were likewise time of noteworthy political brokenness. The early 2000s comprised of numerous occasions, for instance there were the economic debacles. In 2000 the tech bubble popped, and in 2008 the lodging bubble took after. The Financial Crisis from 2007-2008, was one of the most tragic times in world history.

The Financial Reporting Council (FRC) is the key responsible for overseeing the effectiveness of the financial reporting framework. The members of the AASB is appointed by Financial Reporting Council (FRC) (Howieson and Langfield, 2003). FRC can issue broad strategic directions to the AASB, but FRC’s ability is limited by the Australian Securities and Investments Commission Act 2001. Three aspects, which are the codes and standards committee, the executive committee and the conduct committee, support the FRC board. There are some main objectives. For example, accounting standards may

In regards to the Financial Crisis of 2007-2009, a few conceivable reasons can be taken into consideration. For instance, high consumer deficit, high corporate deficit, complex money related securities, transient subsidizing markets got to be vital, extensively feeble administrative/business sector controls, shortcoming in the share trading system, shortcoming in the housing business sector, as well as worldwide monetary shortcomings. Besides the previously mention examples, the untrustworthy conduct by budgetary organizations, the disappointment of the national bank to stop lethal home loans, and over-obtaining by consumers can also be incorporated and taken into account. The effect of the monetary crisis from the perspective of firms was that they confronted declining interest for their products. The organizations thought that it was hard to acquire reserves, in light of the fact that the banks' trust in them had declined. Moreover, the organizations confronted solid rivalry from outside organizations. The likelihood of bankruptcy lingered. From the point of view of investors, the crisis implied conceivable loss of stores and loss of avenues to contribute (Carbaugh, 2006). The financial specialists expected to hunt down more

The mission of FASB is to “improve reporting, focus on traits that are important and reliable and on quality of comparison and consistency, to keep up to date with current trends to reflect modifications in methods used and economic changes, and to improve the common understanding of the purpose and content within financial report” (FASB, 2008). The FASB has an obligation to uphold ethical standards as well as to ensure rules and regulations are followed in the way of financial reporting. The FASB uses input from other agencies when developing or amending standards such as the SEC. Before the Great Crash of 1929, little was done to regulate the securities market (SEC, 2008). Two laws were created to help improve investor confidence: “Securities Act of 1933 and Securities Exchange Act of 1934” (SEC, 2008). According to SEC (2008) the purpose of these laws is to make sure companies display accurate data about their financial accounts, the securities that are sold and involved risks and for the brokers who sell and trade to treat investors with respect by being fair and honest. A more recent law signed in by President Bush in 2002, was the “Sarbanes-Oxley Act of 2002” (SEC, 2008). This act created changes in improving responsibility, disclosures and

The 2007 financial crisis renewed attention on accounting standards as stakeholders sought possible contributors to the crisis (Hellenier, 2011). Accounting standards are set regulations that limit the manner in which transactions are made and accounted for. They are meant to instill sanity into the financial system. The 2007 financial crises has been attributed to weak financial regulations which encouraged accounting malpractices like mis-presentation of the financial situation of businesses in order to keep investors interested (Hellenier, 2011). Accounting standards set requirements for the preparation and reporting of financial information. They, therefore, help minimize such incidences by facilitating the flow of accurate financial information to investors, creditors, regulators, banks, etc (Hertog, 2003). Having an internationally acceptable system of presenting this information brings sanity to the financial system in addition to increasing investor and consumer confidence in banking institutions, businesses, governments, etc.