The Financial Reporting Environment

This chapter provides an overview of the roles played by Financial Accounting Standards Board (FASB), the Emerging Issues Task Force (EITF), and the Private Company Council (PCC) in establishing accounting standards for non-governmental entities. The chapter also examines the FASB Accounting Standards Codification as well as International Financial Reporting Standards and the move toward the globalization of accounting standards. The FASB board is composed of seven independent members. Each individual board member has a diversified background, is appointed to a five-year term, and is then eligible for reappointment for one additional five-year term. The Securities and Exchange Commission (SEC) has the statutory authority to establish financial accounting and reporting standards for publicly held companies. The content in the FASB ASC is arranged topically and updated by the issuance of Accounting Standards Updates (ASUs). FASB ASUs communicate changes to the FASB ASC, but are not considered standalone authoritative standards.