A private sector organization, established in 1973, that has established standards and rules for financial accounting and the production of financial reports. The standards help create an efficient economic system because investors, auditors, and creditors can rely on credible financial infor- mation that is transparent and comparable among different companies.
The mission of the FASB is to establish and improve standards of financial accounting and reporting to guide and educate securities issuers, auditors, and investors. To fulfill its mission, the FASB focuses on improving the usefulness of financial reporting by focusing on how relevant, reliable, comparable, and consistent financial information is; keeps standards current to reflect changes in methods of doing business and changes in the economic environment; watches for any deficiency in financial reporting that might be improved by additional standards; promotes the international convergence of accounting standards; and improves the understanding of information in financial reports.
While the Securities and Exchange Commission (SEC) was given legal authority for establishing financial accounting and reporting standards for publicly held companies through the Securities Exchange Act of 1934, the SEC frequently relies on the FASB to set rules governing financial standards and reporting requirements. The American Institute of Certified Public Accountants also recognizes FASB standards as authoritative. The Financial Accounting Standards Advisory Council advises FASB on issues related to new issues or ongoing evaluation of financial standards. Chief executives, chief financial officers, academics, and senior executives in accounting firms are on the council.