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Importance of Financial Reporting Standards: FASB

Why is it important that the FASB sets standards for financial reporting? Why is it important that the financial reports are done in a way that are useful to the users?

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Hello Student,

Before you answer the first question, the first thing you may want to do is tell what the Financial Accounting Standards Board is. After which you can tell why it is important that the FASB sets standards for financial reporting.

The Financial Accounting Standards Board is an organization in the private sector that is designated with the responsibility for establishing and improving the standards of financial accounting that governs the preparation of financial reports for non-governmental (private) entities. The organization was established in 1973 and its mission reads:

"The mission of the FASB is to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports." Source: ...

Solution Summary

This solution first gives an overview of what the Financial Accounting Standards Board (FASB) is. It then provides information as to why it is important for the FASB to set standards for financia reporting. It also tells why it is important for users to obtain useful financial reports. The solution is adequately referenced.

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