The Financial Accounting Standards Board

2125 Words Nov 10th, 2014 9 Pages
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 overall well-being of the U.S. economy in its role of ensuring the standardization and credibility of financial information that are made available to the public. To maintain an efficient capital market it is necessary to have quality, transparent financial reporting. One way to aid in quality reporting is to establish standards in financial reporting. This is the reason for the creation of GAAP or generally accepted accounting principles.
GAAP was created to protect companies, investors and other stakeholders from questionable accounting practices. GAAP helps to hold companies responsible for their financial reporting activities. Because investors and creditors rely so heavily on receiving transparent and comparable financial…
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