The Financial Accounting Standards Board

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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…show more content…
Since 1973 the task of creating these GAAP standards has fallen on the Financial Accounting Standards Board or FASB. Throughout its history the FASB has helped to protect stakeholder interests by creating standards for financial reporting. Although FASB is held accountable through oversight, it has been the subject of much scrutiny and criticism. Despite not always being looked upon favorably, FASB remains the authoritative standard setting board in the United States. The Securities and Exchange Commission, or SEC, was created by the Securities Act of 1933 and the Securities Exchange Act of 1934. This inception was in response to the stock market crash of 1929 and the subsequent depression. The government felt that it was necessary to establish standards for preparing and auditing the financial statements of publicly held companies. The SEC was given statutory authority to set accounting standards and also given oversight over the activities of auditors. Originally, the American Institute of Certified Public Accountants (AICPA) set the guidelines that all accountants must follow. From 1936 - 1959 the Committee on Accounting Procedure was the authoritative committee that was originally responsible for defining accounting principles for the AICPA. In 1959 it was replaced by the Accounting Principles Board of the AICPA. The Accounting Principles Board remained responsible for establishing accounting
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