The Role of the FASB in the Modern Business Organization University essay

Modern accounting is an information base on which the organization prepares its financial statements. Information that is formed in accounting is used to produce management, tax, statistical reporting, if necessary, on the basis of this information is used and also other types of reporting. The accounting system is certain integrity, or set of elements of accounting are interrelated with each other. Such a system includes a logical set, which summarized the information sent to the correct measurement of the output in order to ensure the economic interests of those states, as well as any other, both external and internal users.

Under any fair (reliable) opinion there may reasonably be implied an opinion based on certain important or fundamental principles or concepts of accounting. In the international context they can be attributed to fundamentals, and may be reflected in legislation and accounting standards, at least five principles:

 Accrual;

 Business continuity;

 Intelligence;

 Sequence;

 Substance over form.

According to Intermediate Accounting, the Financial Accounting Standards Board (FASB) is an American private law and accounting body. It has the objective to determine what United States Generally Accepted Accounting Principles (U.S. GAAP) for companies and private organizations. Since 1973, it is by the Securities and Exchange Commission (SEC) accepted, and the American Institute of Certified Public Accountants (AICPA) in that capacity, as prescribed.

Since the SEC, the U.S. regulatory body for the securities and stock exchanges, pursuant to its powers to the U.S. capital markets firms and organizations can do what U.S. GAAP, the provisions of the FASB for this binding.

According to Facts About FASB, the FASB is organized by the private Financial Accounting Foundation, which is based in Norwalk, Connecticut. The Foundation is responsible for the monitoring, organization and funding of the FASB. The FASB is funded primarily through a levy on all businesses that use the U.S. treasury operations. The tax is calculated on the basis of market capitalization of the company. The statutory tax liability was created by the Sarbanes-Oxley Act.

According to Intermediate Accounting, the FASB has five full-time members, members of the committee from two to five years. They are supported by more than 60 employees. Furthermore, they are the Financial Accounting Standards Advisory Council (FASAC) counsel, a panel of CEOs, CFOs and partners of accounting firms. The Emerging Issues Task Force (EITF) is a body that supports the FASB.

The objective of financial reporting:

 Financial position;

 The results of operations;

 Changes in financial position.

Underlying assumptions in the management of financial accounting and the formation of financial statements are: accrual of revenues and expenses; continuity of the organization.

Qualitative characteristics of information are disclosed in financial statements:

 Clarity;

 Relevance;

 Materiality;

 Reliability;

 Truthful representation;

 The predominance of the essence over form;

 Neutrality;

 Discretion;

 Completeness;

 Comparability;

Elements of financial statements:

 Describing their financial situation at the reporting date:

 Assets;

 Obligations;

 Capital;

 Characterizing the financial results of the organization during the reporting period:

 Revenue;

 Costs;

According to Facts About FASB, before 2009, there were a variety of standards, interpretations and pronouncements that have been developed by various accounting bodies authorized, including the FASB, as U.S. GAAP recognized. In 2009, the FASB has chosen for it by the relevant individual arrangements held systematized, and the Accounting Standards Codification (FASB ASC) activities. It is now the only source authorized by the FASB U.S. GAAP. In addition to the FASB, was developed the Governmental Accounting Standards Board (GASB), as private law and accounting committee under the umbrella of the Financial Accounting Foundation, U.S. GAAP for financial reporting by states, cities and communities in the U.S.

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