Financial Analysis : Financial Accounting Standards Board

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

Fraser, L. M., & Ormiston, A. (201). Understanding financial statements (9th ed.). Upper Saddle River, NJ: Prentice Hall.

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

As stated in the AASB Framework, financial statements play an utmost important role to a variety of users, which mainly consist of the investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies, as well as the public, in making vital financial decisions. For accounting information to be ‘decision useful' to this groups of people, the financial information

In this paper I will identify the four basic financial statements, discuss how they are interrelated with each other, and why they are useful to managers, investors, creditors, and employees.

Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;

When it comes to the rules of accounting, the Financial Accounting Standards Board, or FASB, is in charge mostly. Their main responsibilities include making changes to the rules of accounting they think is crucial for key people and businesses as well as inform them of the changes made. To make sure the rules are understandable by the people and businesses, FASB change and update them to fit what is in today’s capabilities. One of the most important recent changes happened in the first month of twenty-sixteen: many known as “Standard Update 2016-01”.

The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principles (GAAP) within the United States in the public 's interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. It was created in 1973, replacing the Accounting Principles Board and the Committee on Accounting Procedure of the American Institute of Certified Public Accountants. The Financial Accounting Standards Board 's mission is "to establish and improve standards of financial accounting and reporting for the guidance and

Employees should also be presented with the financial statements of the company so that they can realize the fruits of their efforts. With knowledge come great rewards. The impact of knowing the financial status of the company provides incentives for employee performance; work hard and get a bonus. Also, the offering of financial statement will show the employees are not separate from the work that has help to mold and maintain operations but instead include them in what is going on to offer suggestions for improvement. This makes the workers to feel appreciated and increase their efforts in helping the

The “financial statements are formal reports providing information on a company's financial position, cash inflows and outflows, and the results of operations” (Hermanson, p.22). There are four main components that make up a financial statement. The four parts are, balance sheet, income statements, cash flow and, statement of owner’s equity. The balance sheets role is to define the company’s assets liabilities and revenue of the business. The income statement shows the income within the company. Cash flow reviews the position of the company by cash payments and receipts. Lastly, the statement of owner’s equity shows the amount of earnings, stock and other capitals of people in the company. (Hermanson, p.34-35).

The Financial Accounting Standards Board (FASB) was established in 1973 in order to create and develop standards of financial accounting and reporting for the general use of the public and, in particular, users of financial information including auditors, creditors and investors. This financial information is standardized for greater clarity for the guidance and education of users (FASB org, 2009a). The primary purpose of FASB as a private and non-profit organization is to develop Generally Accepted Accounting Principles (GAAP) in the United States. The FASB sets-up accounting standards for public companies in the U.S. under the mandate of the Securities and Exchange Commission (SEC). The FASB oversees the financial security; stability and

Accountants, business owners, investors, creditors and employees use four basic financial statements of an organization to determine the financial well-being and future earnings potential of that organization. Financial statements are a key tool in seeing and understanding the past, present and future condition of an organization. What are these financial statements and what do they mean to the reader? Do the financial statements mean something completely different to an investor, creditor, and employee?

For organizations, it is essential to collect information over a specific period of time and present the information in a structured way towards intended readers. The collection of information can be in the form of financial reporting, project reports and annual reports. Businesses sets goals at the beginning of a fiscal year, and when it comes to the end of the year, investors of the company would like to know how well did the company perform and what financial position is the company at. They are able to find the information in annual reports published by organizations to the general public. Likewise, organizations are required by law to prepare an annual report to present crucial information to shareholders, and allow regulatory agencies to access updated data. It is expected that neutrality should be the characteristic throughout the report. However, in narrative texts companies might create an image that is perceived to be optimistic and positive, neglecting poor performances.

The Financial Accounting Standards Board has issued for public comment two Exposure Drafts related to its disclosure framework project. The first exposure draft proposes amendments to Statement of Financial Accounting Concepts - Conceptual Framework for Financial Reporting, Chapter 3 – Qualitative Characteristics of Useful Financial Information. The purpose of this proposed amendment is to clarify the concept of “materiality”. FASB defines materiality as, information is material if omitting it or misstating it could influence decisions that users make on the basis of the financial information of a specific reporting entity. In other words, materiality is an entity-specific aspect of relevance based on the nature or magnitude or both of the items to which the information relates in the context of an individual entity’s financial report. Consequently, the Board cannot specify a uniform quantitative threshold for materiality or predetermine what could be material in a particular situation.

A company prepares financial statement to provide information about its financial position and performance. This information is in turn used by a wide range of stakeholders (such as investors, banks, customers, suppliers etc) in making economic decisions with respect to respective economic interest in the company. Typically, in terms of ownership by investment in shares of the company, shareholders though own the company but do not manage it. Therefore, the shareholder and other such stakeholders to get comfort in taking sound decision need independent assurance from the auditors that the financial statements reflect true and fair view of the company affairs in all material respects. Hence, in order to enhance the level of