Financial Accounting Standards Board (FASB)

Written By:
Paul Tracy
Updated August 5, 2020

What is the Financial Accounting Standards Board (FASB)?

The Financial Accounting Standards Board (FASB) is an independent non-profit body responsible for the institution and interpretation of Generally Accepted Accounting Principles (GAAP).

How Does the Financial Accounting Standards Board (FASB) Work?

FASB was formed in 1973 and serves as the arm of the SEC responsible for governing the accounting standards for U.S. companies as expressed in GAAP. Its membership comprises seven professional accountants, including a chairman, who are responsible for maintaining and interpreting the components of GAAP in response to changes in market or industrial practices. 

Why Does the Financial Accounting Standards Board (FASB) Matter?

In addition to resolving complications in corporate accounting practices, the FASB promotes and mandates consistency in reporting. This is designed to enhance the accuracy and readability of financial statements while promoting a higher level of financial integrity through increased transparency.