The major body in charge of developing and upholding accounting standards in the US is the Financial Accounting Standards Board (FASB). The FASB is a private, non-profit organization that was founded in 1973 and is governed by the Securities and Exchange Commission (SEC). The FASB took over from the Accounting Principles Board (APB), which was established in 1959 and was tasked with formulating accounting principles and supplying the accounting community with recommendations.
The FASB and APB are different in a number of ways. First of all, as opposed to the APB, which was a committee of the American Institute of Certified Public Accountants (AICPA), the FASB is an independent body that functions under the supervision of the SEC. Second, the APB’s mandate was to develop accounting principles and provide suggestions to the accounting profession, but the FASB’s mandate is to establish and enhance financial accounting and reporting standards. Finally, the APB had 18 members, whereas the FASB is managed by a board of seven members.
The International Accounting rules Board (IASB) created a set of accounting rules known as the International Financial Reporting Standards (IFRS). Over 140 nations around the world apply the IFRS, including the European Union, Australia, and Canada. The goal of the IFRS is to provide globally recognized accounting standards that offer stakeholders, including investors, consistent, transparent, and comparable information.
The FASB is in charge of developing and upholding accounting rules in the US. Since 1973, the FASB has been acknowledged by the SEC as the official accounting standard-setter. The accounting rules used in the United States are generally accepted accounting principles (GAAP), and these are the standards set by the FASB.
The process of developing accounting standards is meticulous and participatory; it entails in-depth study, in-depth analysis, and considerable public involvement. The FASB adheres to a proper procedure that entails stakeholder engagements, the release of exposure drafts, and taking into account public feedback. To guarantee uniformity and comparability among various accounting standards, the FASB also talks with other standard-setting agencies like the IASB.
In summary, accounting standards are essential for preserving the reliability and openness of financial reporting. The IASB is in charge of developing internationally recognized accounting standards, whereas the FASB is primarily responsible for developing and maintaining accounting standards in the United States. To ensure that new accounting standards are open, consistent, and comparable, both organizations adhere to a strict and consultative approach.