In fulfilling its role, the FASB function as part of a three-organization structure. The Financial Accounting Standards Advisory Council (FASAC) collaborates with the FASB in setting up of task forces that look into various financial reporting issues. It also assists the FASB in identifying areas that require the boards’ scrutiny and on setting the agenda for the FASB. It also provides technical support or other services appealed for by the FASB. It draws its membership from accountants, auditors and users of financial information.
The Financial Accounting Foundation (FAF) on its part was established to supervise the funding and running of operations of the FASB. Its mandate however, does not extend to the provision of technical advice on setting of standards. It is also involved in the selection of the members of FASB. Finally it carries out charitable, scientific, educational and literary working the accounting field. The foundation draws its membership from a group of organizations that have interest in financial reporting. The foundation also set up the GASB to provide guidelines in government units. (www. fasb. org, 2008)
Preparers, auditors and users of accounting information bring to the attention of FASB new topics that require consideration. They also propose standards that require reviewing. The board itself is also alert to the changing economic environment. The Emerging Issues Task Force (EITF) provides prompt guidelines new topics prior to the board’s pronouncements. If members of the EITF reach a consensus on the issue, the board then recognizes the EITF’s recommendations and they become part of GAAP. If consensus is not reached, the board is obliged to deliberate on the issue and provide guidance.
The board discussions are held in public in a rigorous and transparent process. It consults with various parties before reaching an independent decision. The decision is presented for public scrutiny in the form of an Exposure Draft and on expiry of the exposure period; the board considers improvements suggested by various groups. The board then votes to allow a pronouncement to be made. This is done through a Statement Of Financial Accounting Standard, which provides details of the standards and the deliberations involved.
In addition, the board may issue a Statement Of Concepts that creates the base upon which deliberation on new standards and reviews are to be done. There is great emphasis on dissemination of all information on standards set right from initial deliberations to the end result arrived at. (www. fasb. org, 2008) The FASB issues standards informs of pronouncements, which tackle a particular issue. There are different types of pronouncements namely statements of financial accounting standards, statements of financial accounting concepts, FASB interpretations, FASB technical bulletins and FASB staff positions.
The FASB also issues EITF abstracts that detail deliberation and decisions arrived at by the task force. The board also provides notes on using FASB pronouncements and EITF abstracts that aid users in application. (www. fasb. org, 2008)
Craig, James L. The AICPA Accounting Standards Executive Committee (Interview With AcSEC Chairman Norman Strauss). The CPA Journal, April 1993. Retrieved on 01/13/08 from http://www. nysscpa. org/cpajournal/old/14152802. htm FASB Pronouncements and EITF Abstract. Financial Accounting Standards Board, 2008.
Retrieved on 01/13/08 from http://www. fasb. org/st/ Facts About FASB. Financial Accounting Standards Board, 2008. Retrieved on 01/13/08 from http://www. fasb. org/facts/ GASB At a Glance. Governmental Accounting Standards Board, 2007. Retrieved on 01/13/08 from http://www. gasb. org/facts/gasb_at_a_glance_july2007. pdf Pakhare, Jayashree. US GAAP – Generally Accepted Accounting Principles, 2007. Retrieved on 01/13/08 from http://www. buzzle. com/articles/us-gaap-generally-accepted-accounting-principles. html