What’s The FASB? What Real Estate Pros Need To Know

The FASB is one organization that provides standardized guidelines for financial reporting. The Financial Accounting Standards Board (FASB) mission is to establish and improve financial accounting standards and report for the public’s guidance and education, including issuers, auditors, and users of financial information.

Accounting standards are essential to the efficient functioning of the economy because decisions about the allocation of resources rely heavily on credible, concise, transparent, and understandable financial information. The public also uses financial information about individual entities’ operations and financial positions to make other decisions.

To accomplish its mission, the FASB acts to:

–Improve the usefulness of financial reporting by focusing on the primary characteristics of relevance and reliability and the qualities of comparability and consistency;
–Keep standards current to reflect changes in methods of doing business and changes in the economic environment;
–Consider promptly any significant areas of deficiency in financial reporting that the FASB might improve through the standard-setting process;
–Promote the international convergence of accounting standards concurrent with improving the quality of financial reporting; and
–Improve the common understanding of the nature and purposes of the information contained in financial reports.

The FASB develops broad accounting concepts as well as standards for financial reporting. It also guides the implementation of standards.

Concepts help the board establish standards and provide a frame of reference, or conceptual framework, for resolving accounting issues. The framework will help establish reasonable bounds for judgment in preparing financial information and increase understanding of and confidence in financial information for users of the financial reports.

It will also help the public understand the nature and limitations of information supplied by financial reporting.