Info 1: FASB definition
Info 2: how FASB works
Info 3: FASB vs GASB
info 4: example of FASB
Quick pick
The Financial Accounting Standards Board is a committee in the United States of America as a private institution to maintain and improve the Generally accepted accounting principles (GAAP)
Opening information:
The financial accounting standard board breaks into two matters. Financial accounting and standard board. Financial accounting means Credit and debts about money, Standard board means usual committee.
Financial accounting standard board means committee usually sets the credit and debit about money method. This article provided information about what is a financial accounting standards board (FASB), How FASB works, and what is the difference the FASB vs GASB, finally one brief example about FASB.
Info 1: Financial accounting standards board definition
Whenever there is a public business which had a strong operation to produce a primary product of the industry. Were such all businesses would have a board of committees to manage and control the whole organization.
However, when certain businesses need changes in control of activities and management it’s decided by the committee board of the specific company.
Here the Generally Accepted Accounting Principal (GAAP) is the product of the institution of one committee board, which that committee is named as Financial Accounting Standards Board.
Wherever the generally accepted accounting principal statement had to modify its rules or things which need to be changed in the Financial Statement order which are controlled and changed by this
Financial Accounting Standards Board (FASB).
So now let’s dive into how FASB functions and works in the public market by improving the GAAP concept rules and regulations.
Info 2: financial accounting standards board works
The financial accounting standard board doesn’t represent any of the specific things or objects instead it’s a committee which is a private institution it’s works under the Security and Exchange Commission.
This institution’s core purpose it’s to improve and maintain the Generally accepted accounting principle (GAAP) method in the United States of America.
Before 1973 this institution worked in the manner of the American Institute of Certified Public Accountants, after that, it was replaced as an accounting principal board and FASB took full responsibility for the improving financial accounting standard board.
However, this financial accounting standard board consistently works on improving the GAAP, Once it changes any rules on the standard accounting, the security and exchangeable commission of the government agency would change their rules as per the audit standard reports.
These changes might also affect all the US public companies and must need to follow the rules and adhere to the Financial Accounting Standard Board (FASB)
Not only the FASB would take a single firm in full control of this GAAP method but the Governmental Accounting Standards Board (GASB) would work with the FASB, so they two take full responsibility for maintaining the fair standards in the accounting reports.
Moreover, FASB is controlled and authorized by the financial accounting foundation, it’s a private Industry without stock Corporations but it takes responsibility for appointing the right person in the FASB and GASB.
This financial accounting foundation(FAF) is the basis for every institution that works and improves the financial accounting standard board.
This FAF organization which is made up of the Institute of Management Accountants, American Accounting Association, American Institute of Certified Public Accountants, Financial Executives International, Institute of Management Accountants,
CFA Institute.
Most people confuse the FASB and GASB, so let’s jump into the key differences anyway.
Info 3: FASB vs GASB
The Financial Accounting Standard Board (FASB) is the private institution that improves the GAAP and its method followed by all public Corporate organizations.
On the other side, the Government accounting standard board (GASB) is a government method followed by the state and local rulers of government.
FASB and GASB’s purposes are the same things but two of them work on different sections. To make more clear about the FASB, let’s see one brief example below.
Info 4: Example for FASB
Say the company Y is a tech public institution and it’s been running successfully for 12 years. It had reported its audit financial statement to the SEC.
On the other, government organizations that are run by the ruler of the government file an audit statement of the spending and income.
Here the government organization audit takes place using the authorized method of GASB and the company Y had submitted audit takes place use of FASB.