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Accounting Principles Board (APB) |
Recommended by the Special Committee on
Research Program that was appointed by the
Institute's president (Alvin Jennings)to study and make
recommendations on the Institute’s role in establishing
accounting principles, including especially the research
component. In its report published in 1958, the committee
proposed the establishment of both an Accounting
Principles Board (APB) to replace the CAP and an
accounting research division to support the APB. The
Institute accepted the committee’s recommendations, and in
1959 the APB succeeded the CAP. |
Promulgation of APB Opinions |
Formal title: Study Group on the Establishment of Accounting Principles | |
* | Appointed in 1971 |
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Its recommendations submitted to the AICPA Council in the Spring of 1972 |
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Resulted in the demise of the APB and the creation of a new standards-setting structure composed of three organizations: |
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Originally
Sixteen trustees Effective July 1, 2008, changed to a flexible range of 14 to 18 trustees |
* | Protects the independence of the Board |
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Appoints FASB and FASAC members |
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Raises money for funding FASB funding changes brought about by Sarbanes-Oxley |
Download (and print) Facts About the FASB |
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Appointed by the FAF |
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Smaller membership (
was 7; changed to 5, now back to 7 members vs. 18
members of the APB) |
✓
(changed
recently to 5 members instead of 7 effective
July 1, 2008--see this link) ✓ Another opinion concerning the desirability of this change! ✓
Financial
Accounting
Foundation
to
Increase
Size
of FASB (Back to 7)
( 8/24/2010)
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Full-time remunerated membership |
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Greater autonomy |
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Increased independence |
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Broader representation |
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Appointed by the FAF | |
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Consults with FASB on both major policy and technical issues | |
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Helps select task force members |
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Topic or project identified and placed on the Board's Agenda |
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Task Force of experts assembled to define problems, issues and alternatives related to the topic. |
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Research and analysis are conducted by the FASB Technical Staff. |
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A Discussion
Memorandum is drafted and released. ( Invitation
to Comment may precede or replace a DM)![]() |
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Public Hearing held (sixty days after release of the memorandum) |
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Board analyzes and evaluates the public response. |
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Board prepares an exposure draft for release. |
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Board evaluates all of the responses. |
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Study of exposure draft--revises draft if necessary. |
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Vote on issuance
of Standards
Statement. Originally required 5 of 7 votes for passage; was changed to 4 of 7 votes in the 1970's, changed back to 5 of 7 in 1990, and most recently, changed back to the 4 of 7 requirement in 2002!) When the membership of the FASB reduced to 5, in 2008, a simple majority voting requirement was retained, which meant that 3 of 5 votes was required for passage. In August, 2010, the membership in the FASB was increased back to 7 members. A simple majority voting requirement was retained. (Note: Under the revised due process [below]) no new standards are now issued. Instead, an Accounting Standards Update is issued, and then incorporated into the Accounting Standards Codification.) |
FASB Due Process
Steps Required by the Rules of Procedure (Revised) The FASB has established the following procedures for developing accounting standards. These procedures are used for major agenda projects. Not all of the steps may be necessary for application and implementation projects. Many other steps are followed during the course of the project that are not specifically required by the Board’s Rules of Procedures.
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"In 1972, when the Wheat Committee—a study group on the
establishment of accounting principles— originally
recommended the formation of FASB, its report looked
forward to standards that would be practical. That concept
has been lost somewhere along the way."
--SAMUEL A. DERIEUX, former AICPA president, Journal
of
Accountancy · Online Issues · May 2000 |
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Formed in 1984 | |
* | consists
of no fewer than 10 and no more than 15 members |
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Consists of membership from: | |
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CPA firms represented | |
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representatives from large firms | |
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representatives from small firms | |
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representatives from industrial companies | |
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observer from the SEC | |
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representative from the FASB (Director of Research and Technical Activities) | |
* | operates at the
direction of the FASB |
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Purpose: | |
* | The mission of the Emerging
Issues Task Force is to assist the Financial Accounting
Standards Board in improving financial reporting through
the timely identification, discussion, and resolution of
financial issues within the framework of existing
authoritative literature. The EITF was designed to minimize the need for the FASB to spend time and effort addressing narrow implementation, application, or other emerging issues that can be analyzed within existing GAAP. |
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identify emerging issues | |
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develop consensus
statements- Make-up of the Task Force is designed to include persons in a position to be aware of emerging issues before they become widespread and before divergent practices become entrenched. Therefore, if the group can reach a consensus on an issue, usually that is taken by the FASB as an indication that no Board action is needed. If the Task Force is unable to reach a consensus, it may be an indication that action by the FASB is necessary. |
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* | A
consensus is reached if no more than three of the voting
members object to a proposed position on an
EITF Issue |
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Acts as a "problem filter" for the FASB | |
SEC has indicated
that it will view consensus statements as preferred
accounting and will require persuasive justification for
departing from them. The SEC's Chief Accountant
has said that he would challenge any accounting that
differs from a consensus of the Task Force because the
consensus position represents the best thinking on areas
for which there are no specific standards. |
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FASB Accounting Standards Codification (ASC) |
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* | FASB Statement No.
168 is the final standard that will be issued by FASB in
that form. It was added to FASB ASC through Accounting
Standards Update No. 2009-02 on June 30, 2009. There
will no longer be, for example, accounting standards in
the form of statements, staff positions, Emerging Issues
Task Force (EITF) abstracts, or AICPA Accounting
Statements of Position. |
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* | Instead, FASB will issue Accounting Standards Updates | |
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FASB will not consider Accounting Standards Updates as authoritative in their own right. | |
* | Instead, they will serve only to update FASB ASC, provide background information about the guidance, and provide the basis for conclusions on changes made to FASB ASC. | |
Subsequent to the Codification, the FASB issues two major types of pronouncements: |
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a. |
Accounting
Standards Updates. |
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b. | Financial Accounting Concepts. The SFACs represent an attempt to move away from the problem-by-problem approach to standard setting that has been characteristic of the accounting profession. The Concept Statements are intended to form a conceptual framework that will serve as tools for solving existing and emerging problems in a consistent manner. Unlike FASB statements, the Concept Statements do not establish GAAP |