The Financial Accounting Foundation (FAF) is a private-sector association that is primarily responsible for developing and strengthening financial accounting and operating practices, as well as informing its constituents about those standards. The FAF is based in Norwalk, Connecticut, and was established in 1972 as a Delaware Corporation with no stockholders. The Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB) are also governed by the Financial Accounting Foundation (FAF), which is responsible for their supervision, management, and finances.
The Financial Accounting Foundation (FAF) is responsible for:
- Financial accounting and reporting standards are being developed and improved;
- Educating constituents about those standards;
- The Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB), as well as their Advisory Councils, are responsible for the supervision, management, and finances of the organization’s standard-setting boards;
- Choosing the members of the standard-setting Boards and Advisory Councils; and
- Maintaining the standard-setting process’s independence and dignity.
For public and private corporations, not-for-profit organizations, and state and local governments in the United States, the FASB and GASB define and develop financial accounting and reporting standards known as Generally Accepted Accounting Principles or GAAP. Both associations set excellent guidelines through a cycle that is strong, thorough, and comprehensive. GASB is a private non-legislative association that makes accounting reporting standards, or generally accepted accounting principles (GAAP), for U.S. state and neighborhood governments.
The Financial Accounting Foundation (FAF) operates four branches in its organization:
- The Financial Accounting Standards Board (FASB)
- The Governmental Accounting Standards Board (GASB)
- The Financial Accounting Standards Advisory Council (FASAC)
- The Governmental Accounting Standards Advisory Council (GASAC)
Standards for publicly traded firms, private companies, and not-for-profit organizations are set by the Financial Accounting Standards Board (FASB). This financial data is used by taxpayers, municipal bond holders, policymakers, and oversight agencies to influence public policy and make investments. The Financial Accounting Foundation (FAF) likewise chooses the individuals from the sheets and boards that set bookkeeping principles and secures their autonomy. The aggregate mission of the FASB, GASB, and FAF is to set up and improve monetary bookkeeping and announcing principles to give helpful data to financial backers and different clients of monetary reports and to teach partners on the best way to most successfully comprehend and carry out those guidelines.
Members of the FAF Board of Trustees come from constituent groups with a stake in financial reporting. These constituent organizations include:
- American Accounting Association
- American Institute of Certified Public Accountants
- CFA Institute
- Financial Executives International
- Government Finance Officers Association
- Institute of Management Accountants
- National Association of State Auditors, Comptrollers and Treasurers
- Securities Industry and Financial Markets Association
The FAF Board of Trustees is made up of 14–18 members who come from a variety of backgrounds, including financial statement consumers, preparers, and auditors, state and local government officials, scholars, and regulators. The FAF coordinates the compelling, productive, and fitting stewardship of the FASB and GASB in doing their missions, chooses and delegates FASB and GASB individuals and their warning chambers, regulates the Boards’ exercises and fair treatment and advances and ensures the autonomy of the Boards.
Since financial markets and governments have too many members with conflicting demands and proprietary interests, the FAF’s standard-setting boards, FASB and GASB, must maintain their independence. Because of their freedom, they are able to offer objectivity and transparency to the financial reporting system in the United States. The FAF Trustees introduced the PIR (Post-Implementation Review) mechanism as part of the FAF’s oversight duties for its two standard-setting bodies, the FASB and the GASB.
The PIR interaction is expected to help the Trustees with their progressing endeavors to assess the viability of the standard-setting measure for both the FASB and the GASB. The FAF’s boards will make rational decisions on accounting standards without being influenced by industrial advocacy organizations or political pressure because it is an autonomous body with no interest in particular outcomes.