What is the Financial Accounting Standards Board (FASB)?
The Financial Accounting Standards Board (FASB) is an independent non-profit organization responsible for establishing accounting and financial reporting standards for companies and non-profit organizations in the United States, following the Generally Accepted Accounting Principles (GAAP).
FASB sets and makes updates to GAAP accounting, a common set of accounting principles, standards, and procedures that companies must follow when they report on their financial standing. United States GAAP is adopted by the U.S. Securities and Exchange Commission (SEC).
FASB’s mission is to “establish and improve financial accounting and reporting standards, to provide useful information to investors and other users of financial reports and educate stakeholders on how to most effectively understand and implement those standards.”
Why is FASB Important?
The SEC recognizes FASB as the accounting standard setter for public companies. Its main goal is to give public companies the ability to establish and improve the accounting methods used to prepare financial statements.
The accounting standards developed by FASB directly impact how businesses report items such as inventory costs, debt, assets, revenue, stockholder’s equity, and taxation. FASB also allows businesses to choose how they depreciate assets on their financial statements, and they must disclose which method is used and use it consistently for the life of the assets.
FASB also requires companies in the same industry to report revenue in the same manner. This helps the public compare each company’s financial statements with the knowledge that the same reporting standards are being used.
How Does Clearwater Help?
Clearwater constantly monitors upcoming changes to regulatory guidance and applies them to the system. That allows your team to analyze data rather than implement the changes.
Clearwater Analytics allows its users to receive automatically generated FASB 115, 133, and 157 reports at the click of a mouse. Clearwater accounts for 15+ audited local GAAP rules (with the ability to add Nth basis accounting) and 100+ asset classes. With our intuitive and user-friendly platform, users can easily customize disclosure reports and other standard balance sheets, income statements, and roll-forward reports.
With Clearwater, you can group data on multiple levels, write formulas, pivot, and add or remove data points. Accounting information can be pulled into varying types of reports and tied to risk and performance information, allowing for a complete picture of your investments.
Learn more about how Clearwater Analytics can help with investment accounting and reporting by scheduling time to speak directly to an expert.