Purpose of FASB
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Do you feel that FASB and GAAP are responsible for preventing fraudulent financial statements? Do you think less flexibility in applying GAAP would help make financial statements more transparent?
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Solution Summary
The stated purpose (mission) of the FASB is to "establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information (FASB, 2007)". While GAAP is commonly defined as being, "the basis of accounting used for general purpose financial statements, which are intended to meet the common information needs of external users" (Turner, 2004).
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The stated purpose (mission) of the FASB is to "establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information (FASB, 2007)". While GAAP is commonly defined as being, "the basis of accounting used for general purpose financial statements, which are intended to meet the common information needs of external users" (Turner, 2004).
Primarily serving as the means by which guidance and direction is provided to the issuers and users of financial information, both the FASB and GAAP are not responsible for preventing fraudulent financial statements. ...
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