Crash Course in Accounting and Financial Statement Analysis, Second Edition

Overview of the Financial Accounting Standards Board

The SEC has historically charged the private sector with establishing and maintaining financial accounting and reporting standards. Accordingly, FASB was established in 1973 to carry out these functions on the behalf of the SEC.

FASB is composed of seven full-time members appointed for five years by the Financial Accounting Foundation (FAF), a parent organization. FASB formulates accounting standards through the issuance of Statements of Financial Accounting Standards (SFAS). These statements make up the body of accounting rules known as the Generally Accepted Accounting Principles (GAAP). While FASB is independent, with close relations with the SEC, its decisions are influenced by a variety of entities (Exhibit 1.3).

Exhibit 1.3. FASB Receives Input From a Variety of Sources

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