ACC305 Wk 5 Final Paper
ACC305 Wk 5 Final Paper
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Date Created: 11/13/15
Final Project Paper Final Project Paper Name ACC 305 INTERMEDIATE ACCOUNTING I BBEO941A Professor March 21 2011 Final Project Paper 2 In 1973 the Financial Accounting Standards Board FASB was created and their mission is to establish and improve standards of financial accounting and reporting for the guidance and education of the public including issuers auditors and users of financial information FASBorg 2009a The FASB is a private notforprofit organization whose primary purpose is to develop generally accepted accounting principles GAAP within the United States The Securities and Exchange Commission SEC designated the FASB as the organization responsible for setting accounting standards for public companies in the US Therefore the FASB plays a vital and important role in protecting the financial well being and the overall stability of our Economy The Financial Accounting Foundation FAF organized in 1972 is the independent privatesector organization with responsibility for the oversight administration and finances of the Financial Accounting Standards Board FASB FAF 2009 The five members of the FASB serve full time and are required to sever connections with the firms or institutions they served prior to joining the Board While collectively they represent diverse backgrounds they also must possess knowledge of accounting finance and business and a concern for the public interest in matters of financial accounting and reporting Board members are appointed for fiveyear terms and are eligible for reappointment to one additional fiveyear term Expiration dates on June 30 of current terms are indicated FASBorg 2009b Final Project Paper 3 The Current Board Members are as follows Robert H Herz Chairman 2012 Robert H Herz was appointed chairman of the Financial Accounting Standards Board FASB effective July 1 2002 and was reappointed to a second term effective July 1 2007 Previously he was a senior partner with PricewaterhouseCoopers Prior to joining the FASB Mr Herz was PricewaterhouseCoopers North America Theater Leader of Professional Technical Risk amp Quality and a member of the firm s Global and US Boards He also served as a parttime member of the International Accounting Standards Board IASB Mr Herz is both a certified public accountant and a chartered accountant FASBorg 2009c Thomas J Linsmeier 2011 Thomas J Linsmeier was appointed as a member of the Financial Accounting Standards Board FASB in July 2006 An awardwinning teacher and researcher with particular expertise in financial reporting for derivatives and riskmanagement activities Dr Linsmeier was formerly Russell E Palmer Endowed Professor and Chairperson of the Department of Accounting and Information Systems at Michigan State University He also has served as academic fellow and special consultant to the Office of the Chief Accountant at the US Securities and Exchange Commission SEC where he was responsible for developing US financial reporting disclosure rules relating the market risk inherent in derivatives and other financial instruments In addition he has held professorial appointments Final Project Paper 4 at the University of Iowa and the University of Illinois at Urbana Champaign Dr Linsmeier is a certified public accountant FASBorg 2009d Leslie F Seidman 2011 Leslie F Seidman was appointed to the Financial Accounting Standards Board FASB effective July 1 2003 Prior to joining the Board Ms Seidman managed her own firm providing consulting services to major corporations accounting firms and other concerns Previously Ms Seidman was vice president of accounting policy at JP Morgan amp Company where she was responsible for establishing accounting policies for new financial products and analyzing and implementing new accounting standards Ms Seidman started her career as an auditor in the New York office of Arthur Young amp Company now Ernst amp Young LLP and is a certified public accountant FASBorg 2009e Marc A Siegel 2013 On October 20 2008 Marc A Siegel was appointed to a fiveyear term with the Financial Accounting Standards Board FASB In this role he brings an investor perspective to the 5member Board that establishes US generally accepted accounting standards for privatesector entities including businesses and notforprofit organizations A recognized expert in forensic accounting Mr Siegel has 17 years of experience in diverse and global industries that include technology media telecommunications healthcare retail and insurance Prior to his appointment to the FASB he led the Accounting Research and Analysis team at the RiskMetrics Group in Rockville Maryland FASBorg 2009f Final Project Paper 5 0 Lawrence W Smith 2012 Lawrence W Smith was appointed to the Financial Accounting Standards Board FASB for a fiveyear term beginning on July 1 2007 As part of the fivemember Board he is responsible for advancing the Board s mission to establish and improve financial accounting and reporting standards to increase transparency for users of financial reports and increasing investor confidence in the capital markets FASBorg 2009g The Financial Accounting Standards Board goes through an elaborate information gathering process before issuing their standards Firstly an issue is identified and placed on the Board39s agenda by the Emerging Issues Task Force Secondly a task force of knowledgeable persons is appointed to advise the Board on the issue Thirdly the Board39s technical staff investigates the issue Fourthly a discussion memorandum on the issue is then written and distributed to interested parties Fifthly the Board holds public hearings and solicits feedback on the issue Sixthly after public hearings a preliminary draft called an exposure draft of a proposed Board statement is issued Seventhly responses to the exposure draft are analyzed and the draft is revised as necessary Lastly a new standard called a Statement of Financial Accounting Standards is issued Furthermore requests for action on various financial accounting and reporting topics from all segments of its diverse constituency including investors and the SEC The auditing profession is sensitive to emerging trends in practice and consequently it is a frequent source of requests Requests for action include both new topics and suggested review or reconsideration of Final Project Paper 6 existing pronouncements The FASB is alert to trends in financial reporting through observation of published reports liaison With interested organizations and discussions With the Emerging Issues Task Force EITF In addition the staff receives many technical inquiries Which may provide evidence that a particular topic or aspect of an existing pronouncement has become a problem The FASB also is alert to changes in the financial reporting environment that may be brought about by new legislation or regulatory decisions FASBorg 2009a Therefore the FASB uses these generally accepted accounting principles to limit and control the reporting of financial information from corporations to end users Moreover Generally accepted accounting principles GAAP are varied but based on a few basic principles that must be upheld by all GAAP rules These principles include consistency relevance reliability and comparability Tiffany Bradford 2007 Therefore by requiring every company to comply with these rules it makes it easier for a person evaluating the statements to make educated guesses regarding the future financial state of a company Moreover it forces companies to give full disclosure on their financial reports that further aid in the financial decisions of businesses and public stakeholders The FASB has five main goals Which are to 1 Improve the usefulness of financial reporting by focusing on the primary characteristics of relevance and reliability and on the qualities of comparability and consistency Final Project Paper 7 2 Keep standards current to re ect changes in methods of doing business and in the Economy 3 Consider promptly any significant areas of deficiency in financial reporting that might be improved through standard setting 4 Promote international convergence of accounting standards concurrent With improving the quality of financial reporting 5 Improve common understanding of the nature and purposes of information in financial reports Furthermore in the pursuit of the FSAB s fourth main goal of promoting international convergence of accounting standards concurrent With improving the quality of financial reporting the FASB is pursuing a convergence project With the International Accounting Standards Board IASB and International Financial Reporting Standards IFRS Moreover in Norwalk Connecticut on Sept 18 2002 FASB and IASB met and issued a Memorandum of Understanding This document outlined plans to converge IFRS and US GAAP into one set of high quality and compatible standards As part of the project FASB has begun moving from the principle of historical cost to fair value Moreover the FASB has not been Without controversy They have sometimes been accused of bowing down to political pressures Therefore in June 2009 the FASB was criticized by an advisory panel of investors after making changes on the fair value accounting in response to political pressure Moreover Fair value accounting refers to the accounting standards of assigning a value to a position held in a financial instrument Final Project Paper 8 based on the current fair market price for the instrument or similar instruments Fair value accounting has been a part of US Generally Accepted Accounting Principles GAAP since the 1990s Therefore the use of fair value measurements has increased steadily over the past decade primarily in response to investor demand for relevant and timely financial statements that will aid them in making better informed decisions In conclusion the FASB is a private notforprofit organization whose primary purpose is to develop generally accepted accounting principles GAAP and the setting of accounting standards for public companies in the US Without their assistance there would be an absence of standardized accounting principles which would lead to an inability for end users to make sound financial judgments The accounting field as a whole would cease to exist and the financial information that companies provided would not be neutral nor reliable Therefore the FASB plays a vital and important role in protecting the financial well being and the overall stability of our economy Final Project Paper References Bradford Tiffany Aug 6 2007 GAAP and Accounting Standards Retrieved March 21 2011 from httpgaapstandardaccounting practicessuite101comarticlecfmWhat is gaapixzzOWcikkbg 2R FAF 2009 Financial Accounting Foundation March 21 2011 from httpWWWfasborgfafindex2shtml FASBorg 2009a Facts about FASB Retrieved March 21 2011 from httpWWWfasborgisnFASBPageSectionPageampcid1 176154526495 FASBorg 2009b Facts about FASB Retrieved March 21 2011 from httpWWWfasborgisnFASBPageSectionPageampcid121822013 1802 FASBorg 2009c Facts about FASB Retrieved March 21 2011 from httpWWWfasborgfactsfactsrhhshtml FASBorg 2009d Facts about FASB Retrieved March 21 2011 from httpWwwfasborgfactsfactstilshtml FASBorg 2009e Facts about FASB Retrieved March 21 2011 from httDWWWfasborgfactsfacts1fsshtml Final Project Paper FASBorg 2009f Facts about FASB Retrieved March 21 2011 from httpWWWfasborgfactsfactsmasshtml FASBorg 2009g Facts about FASB Retrieved March 21 2011 2009 from httDWWWfasborgfactsfactslwsshtml
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