Harold Schroeder 2nd term expires in Marc Siegel Financial Statement User 2nd term expires in The board is supported by more than 60 staff  with backgrounds in public accounting, industry, academia, and government.
Herdman Chief Accountant, U. I know that all of the Members of this Subcommittee have worked diligently over the past few months, and I would like to commend the leadership shown by you, Mr.
Chairman, and Ranking Member Kanjorski, as well as Chairman Oxley and Ranking Member Role of fasb of the full Committee, in exploring these important issues and working to maintain investor confidence. The recent House action on H. I would also like to add that the SEC has appreciated the opportunity to work with you and your staffs, and we look forward to continuing that cooperation.
Recent events and press articles have raised questions about the transparency of the accounting and disclosure practices of some companies. In particular, the Commission believes that the process for setting financial accounting standards must be enhanced so that changes to accounting standards can be implemented more quickly, be more responsive to market changes, and provide more transparent information to investors.
The SEC has a unique position in the financial reporting process. The Commission not only has authority under the securities laws of the United States to set accounting standards to be followed by public companies but also the power to enforce those standards.
Practically since its inception, the Commission has looked to the private sector for leadership in establishing and improving the accounting methods used to prepare financial statements.
As a result, the FASB has the power to set, but not enforce, accounting standards to be used by public companies. Issues needing attention often can be attributed to new and unique transactions that arise in the marketplace, but they also may arise from the authoritative literature.
The SEC staff frequently learns of these issues when companies engage us in a dialogue as to the appropriate financial reporting answer in advance of an event or transaction, commonly referred to as "pre-clearing" an accounting question.
While these pre-clearance questions usually relate to single transactions, trends tend to develop surrounding certain issues. When they do, the staff refers these issues to the FASB and its interpretative bodies for guidance.
The staff also gains insights from the selective review process performed by the Division of Corporation Finance and actions taken by the Division of Enforcement. For example, the SEC staff asked the FASB to add revenue recognition to its agenda because approximately one-half of restatements and one-half of all enforcement actions relate to revenue recognition.
These projects include business combinations, because of issues related to the pooling-of-interests method of accounting, and accounting for financial instruments at fair value, which the SEC staff referred to the FASB because of transparency issues related to derivatives, investments and loans.
We have a responsibility to refer such issues to the FASB, and the FASB has a responsibility to address the issues we refer to them in a timely manner. Some of the issues the SEC staff encounters do not require a fundamental change to existing accounting or completion of a major project by the FASB.
In this manner, timely and appropriate guidance can be provided to preparers and auditors before inappropriate practices become ingrained. The cooperative effort between the public and private sectors has given the United States the best financial reporting system in the world, and the Commission is intent on making it even better.
Importance of Transparent Financial Reporting to the Capital Markets Now I would like to discuss more fully the importance of transparent financial reporting to our capital markets. A primary goal of the federal securities laws is to promote honest and efficient markets and informed investment decisions through full and fair disclosure.
Transparency in financial reporting - that is, the extent to which financial information about a company is visible and understandable to investors and other market participants - is central to meeting this goal.
Therefore, it is critical that all public companies provide transparent disclosures that result in an understandable, comprehensive and reliable portrayal of their financial condition and performance. Thus, audited financial statements, and the standards that underlie them, play a fundamental role in making our markets the most efficient, liquid, and resilient in the world.
Accounting Standard-Setting Process The Securities Act of and the Securities Exchange Act of each clearly state the authority of the Commission to prescribe the methods to be followed in the preparation of accounts and the form and content of financial statements to be filed under the Acts.
The quality of our accounting standards and our capital markets can be attributed in large part to the private sector standard-setting process, as overseen by the SEC. The primary private sector standard setter is the FASB, which was established in An oversight body appoints the members of the FASB.The FASB, the GASB, the FAF Trustees, and the FAF management contribute to the collective mission according to each one's specific role: The FASB and the GASB are charged with setting the highest-quality standards through a process that is robust, comprehensive, and inclusive.
The critical task of setting account standards in the world’s most dynamic economy is the responsibility of the Financial Accounting Standards Board (FASB). For most of the 19th and 20th centuries, the United States struggled to build an effective structure for creating and implementing consistent.
In , the Financial Accounting Standards Board was established to develop a set of financial accounting standards known as generally accepted accounting principals for the private sector. GAAP. In , the Financial Accounting Standards Board was established to develop a set of financial accounting standards known as generally accepted accounting principals for the private sector.
The FASB is an independent organization that creates financial reporting standards for public and governmental organizations. Its role is to ensure that companies report financial information in a clear and ethical way, and that accounting practices are consistent.
Recognize the role of the FASB’s conceptual framework. Content Partner: FMN online. SmartPros Ltd. is a leader in online and offline continuing education for accounting, finance and engineering professionals. With over 2, hours of content, SmartPros has been providing mandatory continuing education.