Purpose of Financial Accounting Standards Board
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. The FASB establishes and improves standards for financial accounting and reporting to provide useful information to investors, creditors, and other users.
The FASB derives authority from the U.S. Securities and Exchange Commission (SEC) to set accounting standards. The FASB accounting standards codification system organizes accounting standards into a searchable database. The codification has nine content areas covering topics like assets, liabilities, equity, revenue, expenses, etc.
Purpose of International Accounting Standards Board
The International Accounting Standards Board develops global accounting standards known as International Financial Reporting Standards. Its mission is bringing transparency and efficiency to financial markets globally. The goal of the International Accounting Standards Board is providing guidance to develop new or revised standards. This assists preparers of financial statements in applying the standards and dealing with issues not explicitly addressed by the standards.
Accounting Standards and Boards
The role of the Financial Accounting Standards Board is establishing and interpreting generally accepted accounting principles in the United States for public, private, and nonprofit organizations. The purpose of accounting is accumulating and reporting financial information regarding a business’s performance, financial position, and cash flows.
Accounting standards promote consistency and comparability of financial statements across companies and industries. This allows investors and other stakeholders to make informed decisions. By requiring truthful disclosures, the Financial Accounting Standards Board helps develop corporate sustainability and governance. The International Accounting Standards Board sets International Financial Reporting Standards used by companies in over 140 countries globally. This ensures financial statement consistency and comparability across different countries and regions.