Acct_632_DB__1_WAustin.pdf (1).pdf

Case Study 1-7 The FASB

Discussion Board #1

Warren Austin

Liberty University

Accounting 632-B02

January 14, 2015

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constructed b: something arranged in a definite pattern of organization 3: manner of

construction 4 a : the arrangement of particles or parts in a substance or body

b: organization of parts as dominated by the general character of the whole c: coherent form of

organization 5: the aggregate of elements of an entity in their relationships to each other.

The site goes on to state that structure is a transitive verb which is to arrange or organize in a

particular way (www.merriam-webster.com).

The Financial Accounting Standards Board grew out of a need for a more authoritative

board. Its predecessor, the Accounting Principles Board, attempted to promulgate policy but

instead, only issued opinions that carried no weight; as they were not deemed “mandatory”. The

APB also suffered from internal and external pressures to sway their opinions on certain policies.

Financial Accounting Standard Board (FASB), and the Financial Accounting Standards Advisory

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A board of Trustees is nominated by organizations whose members have special

knowledge and interest in financial reporting. Examples of the early organizations were the

American Accounting Association, the AICPA, the Financial Executives Institute, Institute of

Management Accountants (f/k/a National Associations of Accountants) and the Financial

Accounting Standards Advisory Foundation (FAF). The FAF in turn appoints the Financial

Accounting Standards Advisory Council (FASAC) who in turn advises the FASB on major

policy issues, the selection of task forces, and the agenda of topics. The FASAC varies the

number of members from year to year (currently holds 30 members) but is required at a

minimum to have at least 20 members. The FAF is also charged with raising the funds to run the

not perfect, the FASB is a definite improvement over its predecessor, the APB.

Question# 2

b)How are the Financial Accounting Foundation members nominated?

Section 4 of the Foundation’s by-laws discusses the qualifications necessary to serve on the

Board of Trustees. The by-laws go on to state

No trustee is allowed any power of substitution; or is allowed to delegate their authority.

Section 5 of the by-laws discusses the nomination process. :

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“Of the number of Trustees comprising the full Board of Trustees, from time to time, at least

three shall be designated as “Governmental Trustees”; and shall be individuals who, in the

“Nominations for each at-large Trustee, other than the Chairman Trustee, shall be sought by the

Foundation from a broad array of domestic and international investor, accounting, and business

organizations; financial and capital markets participants; accounting and business academicians;

consumer groups; regulatory organizations; and other interested entities and persons, including

the Trustees” (www.accounting Foundation.org)

Section 6 indicates that the nominated trustees will elected by the member of the foundation. Also

covered in Section 6 is the removal of trustees. No trustee can be removed except on the vote of a

two-thirds majority of the current members.

Vacancies on the board under section 7 may be filled by a majority vote of trustees then in office.