FASB

The Financial Accounting Standards Board (FASB) is an American private-sector, not-for-profit organization that establishes financial accounting and reporting standards for nongovernmental entities in the United States. It is the designated standard-setter for U.S. generally accepted accounting principles (GAAP) and operates under the oversight of the Financial Accounting Foundation (FAF).

FASB was established in 1973 as the successor to the Accounting Principles Board and is governed by seven full-time board members appointed by FAF trustees. Its mission is to establish and improve financial accounting and reporting standards to provide relevant, reliable, and comparable information for investors and other users of financial statements. The organization issues standards through Accounting Standards Updates (ASUs), which are codified into the Accounting Standards Codification (ASC), the single source of authoritative U.S. GAAP.

The FASB follows a formal due process that includes research, public exposure drafts, comment periods, public deliberations, and consensus-building before new standards are issued. The ASC consolidates all applicable standards into a structured framework that entities follow in preparing financial statements.

In the U.S. system, the Securities and Exchange Commission (SEC) requires GAAP-compliant financial statements for public companies, and the FASB’s standards are recognized by the SEC and the PCAOB. The FASB also collaborates with the International Accounting Standards Board (IASB) on convergence efforts, though full convergence has not been achieved.

Notable FASB projects include revenue recognition (ASC 606), leases (ASC 842), and financial instruments (ASC 815) as well as fair value measurements (ASC 820). The board also operates with consideration for private companies through related private-company guidance.