FASB and the Standard Setting Process Paper
ACC/541 Accounting Theory & Research
July 4, 2011
Identify the organizations and related responsibilities in setting standards
The Financial Accounting Standards Board (FASB) is the primary accounting standard setter for the United States. The members of the FASB determine an agenda and appoint a task force. The task force looks into each item on the agenda.
Once Sarbanes-Oxley was passed in 2002, congress created the Public Company Accounting Oversight Board (PCAOB) to create auditing standards. The members of the board are appointed by the Securities and Exchange Commission (SEC). “The PCAOB rulemaking process is used in the registration, inspection, standard-setting and enforcement programs” (Rules of the Board. 2011). Rules created must be approved by the SEC before PCAOB can use them. The board creates advisory groups to create standards.
Describe the standard setting process
The standard setting process for FASB is as follows. Once an agenda is created for a topic, the task force considers all aspects of the topic. Once this is done, the task force drafts a memorandum which is available to the public. A public hearing is held after 60 days of being made public to discuss. After the hearing, the FASB drafts a statement. The statement is releases for comments for 30 days. After 30 days, the FASB either revises the statement or votes to accept the statement. FASB must also create interpretations to the statement which must also be voted on by the board.
The standard setting process for PCAOB is as follows.
Describe authoritative sources of accounting information
Describe the objectives of financial reporting and its role in the economy
Analyze the role of ethics in financial reporting
Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2011). Financial accounting theory and...