Case 1-7 The FASB INSTRUCTIONS You are to follow the case instructions in the text as you complete your selected case. Items to include are outlined as follows:  500 words in length that addresses a

Case 1-7 The FASB INSTRUCTIONS You are to follow the case instructions in the text as you complete your selected case. Items to include are outlined as follows:  500 words in length that addresses a
This study source was downloaded by 100000793288509 from CourseHero.com on 03-14-2022 16:53:54 GMT -05:00 https://www.coursehero.com/file/11245255/Acct-632-DB-1-WAustin/ DB #1 Acc 632 1 Discussion Board #1 Warren Austin Liberty University Accounting 632-B02 January 14, 2015 Case Study 1-7 The FASB This study source was downloaded by 100000793288509 from CourseHero.com on 03-14-2022 16:53:54 GMT -05:00 https://www.coursehero.com/file/11245255/Acct-632-DB-1-WAustin/DB#1 Acc 632 2 The FASB is the official body charged with issuing accounting standards. Required: Question #1 a) Discuss the structure of the FASB. I believe that it is best to start with a definition of structure. What is structure? According to Merriam–Webster, structure is defined as 1) the action of building 2) a: something that is 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. They also lacked any form of enforcement. Continued criticism of the APB led the AICPA to appoint two committees in 1971; for the express purpose of deciding how accounting principles should be established. One of the two committees was The Wheat commission. The Wheat Commission was chaired by Francis Wheat. Wheat was given the actual task of making the decisions regarding the establishment of the accounting principles. The committee recommended that the APB be abolished and replaced with the Financial Accounting Foundation (FAF) Financial Accounting Standard Board (FASB), and the Financial Accounting Standards Advisory This study source was downloaded by 100000793288509 from CourseHero.com on 03-14-2022 16:53:54 GMT -05:00 https://www.coursehero.com/file/11245255/Acct-632-DB-1-WAustin/DB#1 Acc 632 3 Council (FASAC). The AICPA quickly adopted the Wheat Commission’s recommendations. The Structure of the FASB was and still mostly is as follows: 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 FASB. Up until 2001 the majority of funds to run the FASB came from the AICPA and top accounting firms. However the Sarbanes-Oxley act of 2002 changed the funding of FASB. Now all publicly traded companies must contribute to FASB in the form of fees. Currently $23 Million is collected to fund FASB. (Schroeder, Clark & Cathey (2014) ). As the Bible instructs us in 1 Corinthians 14:40, “But everything should be done in a fitting and orderly way” (www.bilbegatway.com). Although 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 This study source was downloaded by 100000793288509 from CourseHero.com on 03-14-2022 16:53:54 GMT -05:00 https://www.coursehero.com/file/11245255/Acct-632-DB-1-WAustin/DB#1 Acc 632 4 “ 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 judgment of the Board of Trustees, have extensive experience as financial officers or as elected officials of state or local governmental entities. The remaining Trustees shall be designated as “at-large Trustees”; and shall be individuals with business, investment, capital markets, accounting, accounting and business education, financial, government, regulatory, investor advocate or other experience who, in the judgment of the Board of Trustees, can contribute to advancing the purposes of the Foundation ”(www.Accounting Foundation.org) 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. : “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. This study source was downloaded by 100000793288509 from CourseHero.com on 03-14-2022 16:53:54 GMT -05:00 https://www.coursehero.com/file/11245255/Acct-632-DB-1-WAustin/ Powered by TCPDF (www.tcpdf.org)DB#1 Acc 632 5 References Schroeder G. Richard ,Clark W. Myrtle & Cathey M. Jack (2014). Financial Accounting Theory and Analysis (11 th ed.). Hoboken, NJ: John Wiley & Sons pgs. 10-11 http://www.merriam-webster.com/dictionary/. 14 Jan. 2015 Merriam-Webster.com . structure http://www.accountingfoundation.org BibleGateway.com. (2014). 1 Corinthian 14:40 (NIV) .Retrieved from: ht tp: //www. Biblegateway .com .