Editing Financial Accounting Standards Board (section)

== History ==
=== Inception ===
Marshall Armstrong, then-president of the [[American Institute of Certified Public Accountants]] (AICPA), appointed a group of seven men (collectively called the Wheat Committee after its head Francis Wheat) in 1971 to examine the organization and operation of the [[Accounting Principles Board]], in order to determine what adjustments were needed to facilitate more accurate and timely results and avoid governmental rule-making.<ref name="Zeff" /><ref>{{Cite book|title=Intermediate Accounting 11th Edition Volume 1|last=Kieso, Weygandt, Warfield|first=Donale, Jerry, Terry|publisher=John Wiley & Sons Inc.|year=2005}}</ref><ref>{{Cite book|title=Intermediate Accounting 15th Edition FASB Update|last=Kieso, Weygandt, Warfield|first=Donale, Jerry, Terry|publisher=John Wiley & Sons Inc.|year=2014}}</ref> Their findings, "Report of the Study on the Establishment of Accounting Principles", were published in March 1972, and proposed several changes including establishing the Financial Accounting Foundation, separate from other professional firms, that would be overseen by the Board of Trustees. The FASB was conceived as a full-time body to insure that Board member deliberations encourage broad participation, objectively consider all stakeholder views, and are not influenced or directed by political/private interests.<ref name="Zeff">{{Cite journal|last=Zeff|first=Stephen A.|title=The Wheat Study on Establishment of Accounting Principles (1971–72): A historical study|journal=Journal of Accounting and Public Policy|volume=34|issue=2|pages=146–174|doi=10.1016/j.jaccpubpol.2014.12.004|year=2015}}</ref> The Wheat Report also recommended developing the "Financial Accounting Standards Advisory Council, a 20-member advisory council that members serve an initial 1-year term, that could be renewed indefinitely, and to explicitly define the FASB research projects, to ensure timely and appropriate results.<ref name="Zeff" />

The U.S Securities and Exchange Commission (SEC) issued Accounting Series Release No. 150 (ASR 150), which states that FASB pronouncements will be considered by the SEC as having "substantial authoritative support", in 1973.<ref name="FASB timeline">{{cite web|title=Timeline|url=http://www.fasb.org/jsp/FASB/Page/TimelinePage&cid=1175805309640|website=www.fasb.org|access-date=1 November 2017}}</ref> That same year, the FASB issued its first standard, ''Statement of Financial Accounting Standards No. 1: Disclosure of Foreign Currency Translation Information''.<ref name="Standard 1">{{cite web|title=Statement of Financial Accounting Standards No. 1|url=http://www.fasb.org/timeline/timeline-assets/assets/downloads/1973_statement-of-financial-accounting-standards-no-1_fin.pdf#view=Fit|access-date=1 November 2017}}</ref>

=== Conceptual Framework ===
The FASB Conceptual Framework was established in 1973 as a comprehensible set of standards and rules intended to address and solve new emerging issues. The conceptual framework underlaid financial accounting by serving as the Board's reasoning behind its standards-setting decisions.<ref name="Storey">{{cite book|last1=Storey|first1=Reed K.|last2=Storey|first2=Sylvia|title=The Framework of Financial Accounting Concepts and Standards|date=1998|publisher=Financial Accounting Standards Board|location=Norwalk, CT|url=https://books.google.com/books?id=ELJpQgAACAAJ}}</ref><ref name="Freedman">{{cite web|last1=Freedman|first1=John|title=What Is the Conceptual Framework Developed by the Financial Accounting Standards Board?|url=http://smallbusiness.chron.com/conceptual-framework-developed-financial-accounting-standards-board-67249.html|access-date=16 November 2017|language=en}}</ref>

The conceptual framework provides two functions: to state the objectives of financial reporting and provide definitions of financial statement elements. The conceptual framework creates a foundation for financial accounting and establishes consistent standards that highlight the nature, function, and limitations of financial reporting.<ref name="Storey"/><ref name="Freedman"/>

=== Emerging Issues Task  Force ===
The FASB formed the Emerging Issues Task Force (EITF) in 1984.<ref name=" FASB Facts" /> It was formed to provide timely responses to financial issues as they emerged. The group includes 15 people from both the private and public sectors coupled with representatives from the FASB and an SEC observer.<ref name="Spiceland" /> As issues emerge, the task force considers them and tries to reach a consensus on what course of action to take. From conception until the 2003 AICPA GAAP Agreement, if consensus was reached on a topic, the group would issue an EITF Issue that was considered equivalent to a FASB pronouncement and included in GAAP.<ref name="Spiceland" />

=== International standard setting comparability ===
The FASB participated in an international conference on global accounting standards in 1991, ''The Objectives and Concepts Underlying Financial Reporting'', co-sponsored by the International Accounting Standards Committee and the Fédération des Experts Comptables Européens.<ref name="Cairns">{{cite SSRN |last1=Cairns|first1=David|title=The Conceptual Framework - The International Experience|date=2001|ssrn=2379002}}</ref>

Two years later, the FASB participated in the formation of the G4+1, a group of international standard setters. Its members included the United States, Australia, the United Kingdom, Canada, and New Zealand.<ref name="Cairns" /> In August 1994 the group released a special report, ''Future Events: A Conceptual Study of their Significance for Recognition and Measurement''.<ref name="Johnson">{{cite web|last1=Johnson|first1=L. Todd|title=Future Events: A Conceptual Study of Their Significance for Recognition and Measurement|url=http://www.fasb.org/timeline/timeline-assets/assets/downloads/1991_fasb-special-report_fin.pdf#view=Fit|access-date=1 November 2017}}</ref>

In 1999, the FASB issued ''International Accounting Standard Setting: A Vision for the Future'', a report which acknowledged the rapid changes taking place in the international accounting standard setting environment, and that convergence and development of high-quality international standards are coinciding goals.<ref name="IASS">{{cite book|last1=Financial Accounting Standards Board|title=International Accounting Standard Setting: A Vision for the Future|date=1999|publisher=FASB|location=Norwalk}}</ref>

=== Norwalk Agreement ===
{{Main|Norwalk Agreement}}
In 2002, the FASB began to work on a convergence project in partnership with the International Accounting Standards Board (IASB), the independent accounting standard-setting body of the International Financial Reporting Standards Foundation.<ref>IFRS Foundation, 2012. [http://www.ifrs.org/The+organisation/IASCF+and+IASB.htm About the IFRS Foundation and the IASB]. Retrieved on April 28, 2012. {{Webarchive|url=https://web.archive.org/web/20120723093608/http://www.ifrs.org/The+organisation/IASCF+and+IASB.htm |date=July 23, 2012 }}</ref> The two groups met on September 18, 2002, in Norwalk, Connecticut, to sign a [[Memorandum of Understanding]] (MoU)<ref name="IASB">{{citation |publisher=Financial Accounting Standards Board and International Accounting Standards Board |date=2002 |url=http://www.fasb.org/news/memorandum.pdf |title=Memorandum of Understanding, The Norwalk Agreement |access-date=March 17, 2009}}</ref> which "committed the boards to developing high-quality, compatible accounting standards with a common solution."<ref name="FASB_IASB_2015">{{cite web |url=http://www.lexology.com/library/detail.aspx?g=4a9271bc-0675-493f-ad99-5fc859227939 |url-access=registration |date=May 18, 2015 |title=Will SEC finally nix IFRS in the United States? |website=Lexology |author=Calfee Halter & Griswold LLP |access-date=April 26, 2016}}</ref><ref>Financial Accounting Standards Board and International Accounting Standards Board (2002). [http://www.fasb.org/news/memorandum.pdf ''Memorandum of Understanding, "The Norwalk Agreement".''] {{Webarchive|url=https://web.archive.org/web/20201106232731/https://www.fasb.org/news/memorandum.pdf |date=2020-11-06 }}.  Retrieved March 17, 2009.</ref>

This MoU, which came to be known as the Norwalk Agreement, outlined plans to converge IFRS and U.S. GAAP into one set of high quality and compatible standards. For ten years the FASB and IASB collaborated on a common objective not only to eliminate differences between IFRS and U.S. GAAP wherever possible, "but also to achieve convergence in accounting standards that stood the test of time."<ref name="FASB_IASB_2015"/>

=== Sarbanes-Oxley Act of 2002 ===
The [[Sarbanes–Oxley Act|Sarbanes–Oxley Act of 2002]] was signed into law on July 30, 2002, to protect stakeholders and investors by improving the dependability and precision of corporate financial disclosures. The legislation also created the Public Company Accounting Oversight Board (PCAOB), and included accounting support fees from issuers of securities to FASB.<ref name="SOX">{{cite web|title=Sarbanes-Oxley Act of 2002'|url=https://www.gpo.gov/fdsys/pkg/PLAW-107publ204/html/PLAW-107publ204.htm|access-date=24 April 2018}}</ref>

=== AICPA's GAAP agreement ===
In November 2002, FASB Chairman Robert Herz announced that FASB and AICPA came to the agreement that the AICPA would no longer issue Statements of Positions (SOPs) that are considered authoritative GAAP.<ref name="Bryan-Low">{{cite news|last1=Bryan-Low|first1=Cassell|title=FASB Takes Back Powers In Accounting Rule Making|url=https://www.wsj.com/articles/SB1036450538489975348|access-date=24 April 2018|work=WSJ|date=5 November 2002}}</ref><ref name="Bragg">{{cite book|last1=Epstein|first1=Barry J.|last2=Nach|first2=Ralph|last3=Bragg|first3=Steven M.|title=Wiley GAAP codification enhanced|url=https://archive.org/details/wileygaapcodific00epst|url-access=limited|date=2009|publisher=John Wiley & Sons|location=Hoboken, NJ|isbn=978-0-470-49828-6|page=[https://archive.org/details/wileygaapcodific00epst/page/n33 16]}}</ref> They also concluded that consensus of the EITF will be required to be ratified by the FASB to become authoritative GAAP.<ref name="Bragg"/>

=== Investor Task Force ===
The FASB established the Investor Task Force (ITF) in 2005, which was an advisory resource that provided the Board with sector expertise and specific insights from the professional investment community on relevant accounting issues.<ref name="Gullapalli">{{cite news|last1=Gullapalli|first1=Diya|title=FASB to Create Investor Task Force|url=https://www.wsj.com/articles/SB112796072436155479|access-date=24 April 2018|work=Wall Street Journal|date=29 September 2005}}</ref> The FASB then implemented [[SFAS 157]] which established new standards for disclosure regarding [[fair value]] measurements in financial statements in 2006.<ref name=FAS157>http://www.fasb.org/summary/stsum157.shtml, "Summary of Statement No. 157" – FASB Pre-Codification Standards</ref> That same year, the FASB added Investor Liaisons to its staff, who would be responsible for reaching out to investors to hear feedback on the various FASB activities.<ref name="Chandy Smith">{{cite web|title=Chandy C. Smith Bio|url=http://www.fasb.org/cs/ContentServer?c=Page&cid=1176156484986&d=&pagename=FASB%2FPage%2FSectionPage|website=FASB|access-date=25 April 2018}}</ref>

=== Financial Crisis Advisory Group (FCAG) ===
The FASB and the [[International Accounting Standards Board]] created the Financial Crisis Advisory Group in 2008—an international group of standard-setting bodies—that coordinated responses "on the future of global standards in light of" the [[2008 financial crisis]].<ref name="FCAG_2009_Haddrill">{{citation |url=http://www.accountancyage.com/aa/news/1778629/dont-mix-politics-standards-haddrill|title=Don't mix politics and standards, says Haddrill] |work=[[Accountancy Age]] |date=February 26, 2009 |access-date=April 26, 2016 |first=Kevin |last=Reed}}</ref> The FCAG was composed of 15–20 senior leaders in finance and chaired by Harvey Goldschmid and Hans Hoogervorst with a mandate to investigate financial reporting issues uncovered by the [[2008 financial crisis]]. FCAG members included [[Stephen Haddrill]] and [[Michel Prada]]—a member of the [[International Centre for Financial Regulation]] (ICFR) and co-chair of the Council on Global Financial Regulation was a member of the Financial Crisis Advisory Group.<ref name=GPPS>{{cite web |url=http://www.globalpublicpolicysymposium.com/bios/prada_michel.htm |title=Michel Prada Chairman, Autorité des Marchés Financiers (France) |work=Global Public Policy Symposium |access-date=2011-06-07 |archive-url=https://web.archive.org/web/20081121202355/http://www.globalpublicpolicysymposium.com/bios/prada_michel.htm |archive-date=2008-11-21 }}</ref><ref name=ICSA>{{cite web |url=http://www.icsa2010agm.com/michel-prada-19-66.aspx |title=Michel Prada |publisher=International Council of Securities Associations |access-date=2011-06-07 |archive-url=https://web.archive.org/web/20110714043711/http://www.icsa2010agm.com/michel-prada-19-66.aspx |archive-date=2011-07-14 }}</ref> Haddrill who was the only UK representative on the FCAG, is CEO of the [[Financial Reporting Council]] (FRC) in the [[United Kingdom]] and has a close interest in [[accounting standards]].<ref name="FCAG_2009_Haddrill"/>

The FCAG issued a report in July 2009 finding, among other things, that the FASB and SEC had been pressured by politicians and banks to change accounting standards to protect banks from the impact of their toxic mortgages.<ref name="FCAG_2009_Haddrill"/><ref name="McGinty_2009">{{citation |last=McGinty |first= T |title=Panel Assails Meddling Into FASB Rules Making |work=Wall Street Journal via EBSCO|date=July 29, 2009 }}</ref><ref name="toxic_USA_today_2009">{{citation |last=Pallavi |first=Gogoi |title=Accounting rule that put banks in a bind dumped |work=USA Today via EBSCO |date=April 3, 2009 }}</ref> Just prior to the report to the [[G20]], and in reference to the political pressure placed on standards setters "to make changes to fair value accounting rules over suggestions that it exacerbated the financial crisis" Haddrill cautioned, "Who do we want to set accounting standards? Not politicians, that's clear. But neither do we want experts vacuum-packed in a world of their own."<ref name="FCAG_2009_Haddrill"/>

=== Accounting Standards Codification ===
{{Main|Accounting Standards Codification}}
On July 1, 2009, the FASB announced the launch of its Accounting Standards Codification,<ref name="Codification">{{cite web|title=FASB Accounting Standards Codification®|url=https://asc.fasb.org/|website=asc.fasb.org|access-date=1 November 2017}}</ref><ref name="FASB resources">{{cite web|title=Financial Accounting Standards Board (FASB)|url=https://www.iasplus.com/en/resources/regional/fasb|website=www.iasplus.com|access-date=1 November 2017|language=en}}</ref><ref name="Practical">{{cite web|title=FASB To Launch Accounting Standards Codification on July 1, 2009|url=https://content.next.westlaw.com/Document/Ibb0a63c8ef0511e28578f7ccc38dcbee/View/FullText.html?contextData=(sc.Default)&transitionType=Default&firstPage=true&bhcp=1|website=content.next.westlaw.com|access-date=1 November 2017|language=en}}</ref> an online research system representing the single source of authoritative nongovernmental U.S. GAAP, available from the FASB in multiple views; Professional view, Academic view, and Basic view. The Codification organizes the pronouncements that constitute U.S. GAAP into a consistent, searchable format.<ref name="accounting_standards_2009">Financial Accounting Standards Board (2009). ''[http://www.fasb.org/cs/ContentServer?c=FASBContent_C&pagename=FASB%2FFASBContent_C%2FNewsPage&cid=1176156318458 News Release 07/1/09.]'' Retrieved September 8, 2009.</ref> The Codification is not to be confused with the FASB's 1973 Conceptual Framework project.<ref name="FASB resources" />

=== Convergence to international comparability ===
In 2010, the SEC instructed the staff to create and implement a work plan that addresses whether, when and how U.S. GAAP should be merged into a global reporting model developed by International Accounting Standards Board (IASB)—the standards setting body designated by the International Financial Reporting Standards (IFRS). The SEC staff research included including convergence with IFRS and an alternate IFRS endorsement mechanism.<ref>{{cite web|title=Commission Statement in Support of Convergence and Global Accounting Standards|url=https://www.sec.gov/rules/other/2010/33-9109.pdf|publisher=SEC|access-date=26 April 2018|pages=16, 25|date=4 February 2010}}</ref>

In the resulting 2012 report, the SEC Staff asserted that the IFRS standards were not sufficiently supported by U.S. capital market participants and lacked consistent implementation methods. The report goes on to say that, while the U.S. financial reporting community does not support IFRS as the authoritative mechanism for US financial reporting, there is support for "high-quality, globally accepted accounting standards" as demonstrated in the joint efforts of the IASB and FASB to develop converged financial reporting for revenue recognition and lease accounting.<ref name="Work Plan">{{cite web|title=Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers|url=https://www.sec.gov/spotlight/globalaccountingstandards/ifrs-work-plan-final-report.pdf|access-date=1 November 2017}}</ref>

The FASB and the IASB issued guidance on recognizing revenue in contracts with customers in 2014, establishing principles to report useful information to users of financial statements about the nature, timing, and uncertainty of revenue from these transactions.<ref name="Cohn RR">{{cite news|last1=Cohn|first1=Michael|title=FASB and IASB Issue Revenue Recognition Standard|url=https://www.accountingtoday.com/news/fasb-and-iasb-issue-revenue-recognition-standard|access-date=26 April 2018|work=Accounting Today|date=28 May 2014|language=en}}</ref> In May 2015 the SEC acknowledged that "investors, auditors, regulators and standard-setters" in the United States did not support mandating International Financial Reporting Standards Foundation (IFRS) for all U.S. public companies. There was "little support for the SEC to provide an option allowing U.S. companies to prepare their financial statements under IFRS." However, there was support for a single set of globally accepted accounting standards.<ref name="FASB_IASB_2015"/> The FASB and IASB planned meetings in 2015 to discuss "business combinations, the disclosure framework, insurance contracts and the conceptual framework."<ref name="FASB_IASB_2015_Lugo">{{citation |date=Jun 15, 2015 |first=Denise |last=Lugo |title=FASB-IASB make full circle return to the norwalk agreement }}</ref> As of 2017, there were no active bilateral FASB/IASB projects underway. Instead, the FASB participates in the Accounting Standards Advisory Forum, a global grouping of standard-setters, and monitors individual projects to seek comparability.<ref name="Cohn ASAF">{{cite news|last1=Cohn|first1=Michael|title=New FASB Chairman Makes Plans for Future Accounting Standards|url=https://www.accountingtoday.com/news/new-fasb-chairman-makes-plans-for-future-accounting-standards|access-date=26 April 2018|work=Accounting Today|date=29 July 2013|language=en}}</ref>