The Financial Accounting Standards Board (FASB) is an organization which institutes the standards for financial accounting and reporting and sets up accounting principles. The FASB is a private organization established in 1973 with the purpose of improving the criterion of financial reporting. The FASB has a mission, an agenda, and follows and open decision-making process.
The mission of the FASB can be found on its website: "to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors and users of financial information" (FASB, 2005, para 3). The organization accomplishes this mission through working to improve the usefulness of reports in regards to relevance and reliability, maintaining the currency of standards with the changes in business, reacting without delay to deficiencies in reporting, promoting the worldwide assemblage of standards, and striving to improve the understanding of key concepts in financial reporting (FASB, 2005).
The FASB includes a Board who work from a technical agenda. This agenda includes new topics to review and old areas to reconsider. Because of the constant changing of the trends of business, topics are continually added to the agenda. New topics arise due to requests from the FASB's constituency, including the Security and Exchange Commission (SEC). These requests are reviewed by the FASB and other organizations which they turn to for advice, including the Accounting Standard Executive Committee and the Institute of Management Accountants. The Board of the FASB reviews its list of topics, request for topics, and information provided by its outside advisors and published reports. When adding a new topic to the agenda, the FASB Board considers several factors: pervasiveness of the issue, alternative solutions, technical feasibility, practical consequences, convergence possibilities, cooperative opportunities, and resources (FASB, 2005).
The FASB has an extensive impact...