The Financial Accounting Standards Board (FASB) is known as organization that provides standardized guidelines for financial reporting. The mission of the FASB 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.
It should be mentioned that accounting standards are essential to the efficient functioning of the economy due to the fact that decisions on allocation of resources rely heavily on credible, concise, transparent and comprehensive financial information about operations and financial position of individual entities which is used by the public in making various kinds of decisions.
Hence, to accomplish its mission, the FASB acts to:
- make financial reporting more useful by focusing on the primary characteristics of relevance and reliability as well as the qualities of comparability and consistency;
- keep standards up-to-date to reflect changes both in methods of doing business and economic environment;
- promptly consider and study any significant deficiency areas in financial reporting that might be improved by implementing standard-setting process;
- promote the international convergence of accounting standards concurrent with improving the quality of financial reporting; and
- improve the comprehension of the nature and purposes of information contained in financial reports.
Therefore, it may be assumed that the FASB not only ensures development of broad accounting concepts as well as financial reporting standards, but also provides guidance on their implementation.
Concepts are believed to be quite helpful in guiding the Board in establishing standards and along with provision with a frame of reference, or conceptual framework, and, finally, for resolving accounting issues. Thus, one may come to conclusion that with the help of the framework it is possible not only to establish reasonable bounds for judgment in preparing financial information as well as to increase comprehension of, and confidence in, financial information on the part of financial reports’ users but also make the entire process, nature and limitations of information supplied by financial reporting more clear.
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