Legal Definitions - Financial Accounting Standards Board

The Financial Accounting Standards Board (FASB) is an independentorganization of accountants that creates and improves standards for financial accounting and reporting. The FASB is responsible for ensuring that financial statements are accurate, transparent, and useful to investors and other stakeholders.

For example, the FASB may establish a new standard for how companies should report revenue in their financial statements. This standard would provide guidance on how to recognize revenue, when to recognize it, and how to measure it. By following this standard, companies can ensure that their financial statements are consistent and comparable to those of other companies.

The FASB also interprets existing standards and provides guidance on how to apply them in specific situations. For instance, if a company is unsure how to account for a complex financial transaction, it can consult the FASB's guidance to determine the appropriate accounting treatment.

Overall, the FASB plays a critical role in maintaining the integrity and reliability of financial reporting in the United States.