Financial Accounting Foundation

Last updated
Financial Accounting Foundation
Company type Private
Industry Accounting
FoundedJune 30, 1972;51 years ago (1972-06-30) in Norwalk, Connecticut, United States
Headquarters
Norwalk, Connecticut
,
United States
Key people
John Auchincloss (executive director)
Website accountingfoundation.org

The Financial Accounting Foundation (FAF) is located in Norwalk, Connecticut, United States. It was organized in 1972 as a non-stock, Delaware Corporation. It is an independent organization in the private sector, operating with the goal of ensuring objectivity and integrity in financial reporting standards. FAF operates four branches in its organization: the Financial Accounting Standards Board (FASB), the Governmental Accounting Standards Board (GASB), the Financial Accounting Standards Advisory Council (FASAC), and the Governmental Accounting Standards Advisory Council (GASAC).

Contents

History

1970s

In early May 1972, the 250-member governing council of the American Institute of Certified Public Accountants gathered in Boca Raton, Florida to consider the Wheat Report by Francis M. Wheat, formerly of the SEC. [1] The report recommended establishing new financial accounting standards. According to the New York Times , the accounting field had been under pressure after accounting-related lawsuits such as the Yale Express case of 1967 and the Continental Vending case of 1969. The Wheat Report recommended establishing a seven person Financial Accounting Standards Board (FASB) to replace the Accounting Principles Board, [1] which had been making rules for the profession since 1959. [2] The Wheat Report also recommended creating a Financial Accounting Foundation with nine salaried trustees to select board members of the FASB. The nine would include the "A.LC.P.A., four C.P.A.'s in public practice, two financial executives, one financial analyst and one accounting educator." [1] The report was approved on May 2, 1972. [3] The FAF was founded on June 30, 1972. [4]

The nine trustees were appointed in late September, 1972, with nominations submitted by various businesses. Ralph E. Kent of Arthur Young & Co was elected president of the Financial Accounting Foundation. Kent asserted that $10 million had been pledged by accounting firms to cover part of the $15 million that would be needed to run the new program for five years. Other officers named were Thomas A. Murphy as vice president, James Don Edwards as secretary, and Thomas C. Pryor as treasurer. [2] The Financial Accounting Foundation published its first draft of accounting rules for the FASB in October 1972. [5]

1980s-1990s

In 1984, the FAF created the Governmental Accounting Standards Board (GASB) to set accounting standards for local and state governments. [6] Private entities remained under the guidelines of the FASB. According to the New York Times, the system "provoked sharp criticism" in relation to types of companies with mixed private and government ownership. Detractors argued the system made it difficult for investors and bond rating agencies to "compare the financial statements of, for example, a private college with those of a state-owned school." [6] In 1989, the FAF voted 12 to 2 to "require government-owned utilities, hospitals, colleges and universities to base their accounting decisions" on FASB standards instead of the GASB standards. [6] In 1988, the FAF moved from Stamford to Norwalk, Connecticut. [7] In 1989, the FAF remained based in Norwalk, meeting also in New York. [6]

As a private-sector trust, the FAF in the 1980s continued to oversee the FASB, which was funded with corporate money and served as a rule-making body setting the "binding accounting standards for virtually every publicly owned corporation in the United States." [8] As of August 1985, FAF trustees continued to have voting power to decide replacements on the seven member board of the FASB. [8]

In November 1989, the FAF voted to limit the jurisdiction of the GASB. Higher-education groups reportedly favored the change, but according to the New York Times, it also "produced a far-reaching outcry in the accounting profession and the agencies affected," particular state and local government groups, some of which began working to form a new accounting standards agency separate from the FAF. [9] In early 1991, the FAF announced it was potentially facing a third annual deficit, and facing deficits through 1995 unless trends changed. It had shortfalls of $1.6 million in 1990, apparently due to drops in private contributions and publication sales. Shaun F. O'Mally, president of the FAF, said the deficit was not at "matter about which the public should be concerned." [7]

The FAF agreed on an internal restructuring in July 1996. The chairman of the Securities and Exchange Commission, Arthur Levitt Jr., had recently demanded changes. Part of the deal involved the FAF agreeing to expand the foundation directors representing the public to five, rather than one. The FAF board at the time was 16 seats total. [10] The FAF ultimately expanded that year so that half its members came from the public. [11]

2000s

The FAF in September 2005 leased new office space in Norwalk, Connecticut. [12] In early 2011, the FAF cut the FASB board from seven members to five members. It had previously had seven board members from 1973 when it was founded until 2008. [13] In late 2022, FAF headquarters continued to be Norwalk. [14] In February 2023, the FAF launched free online access to the FASB's Accounting Standards Codification and the GASB's Governmental Accounting Research System, with previously paid-only navigation features made available to all subscribers. [15] In response to SEC recommendations, in April 2023, FAF added features to its website for stakeholders to make complaints about the FASB and GASB's adherence to procedure. [16]

Standards and branches

The foundation is responsible for: [17]

FAF operates four branches in its organization:

Board of trustees and committees

The FAF Board of Trustees is made up of members from constituent organizations having interest in financial reporting. These constituent organizations include:

The FAF operates seven committees:

Executives and board members

There are currently five officers and fourteen trustees.

The original nine trustees were appointed in late September, 1972, with Ralph E. Kent elected FAF president. [2] In 1990, Shaun F. O'Mally was president of the FAF, [7] and in 1997, J. Michael Cook was in the role. [11] FAF president and COO in June 2007 was Robert J. DeSantis. [18] Terri Polley was named FAF CEO in 2010, and in January 2015, was both president and CEO. [19] In February 2020, FAF appointed former acting president John Auchincloss as the foundation's executive director. [20]

John J. Brennan was FAF chairman in late 2010. [21] In 2016, Charles Noski was FAF chairman. [22] After beginning to chair the FAF at the start of 2016, Noski began serving as the reappointed chairman of the FAF board of trustees in April 2019, but only to the end of the year. [23] Edward C. Bernard was named chairman of its board of trustees in November 2022, with the three-year chairmanship beginning on January 1, 2023. He succeeded Kathleen L. Casey. [24]

Other past executives have included:

See also

Related Research Articles

<span class="mw-page-title-main">Financial Accounting Standards Board</span> Rulemaking body for moneyed transactions tracking in the US private sector

The Financial Accounting Standards Board (FASB) is a private standard-setting body whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public's interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. The FASB replaced the American Institute of Certified Public Accountants' (AICPA) Accounting Principles Board (APB) on July 1, 1973. The FASB is run by the nonprofit Financial Accounting Foundation.

The Governmental Accounting Standards Board (GASB) is the source of generally accepted accounting principles (GAAP) used by state and local governments in the United States. As with most of the entities involved in creating GAAP in the United States, it is a private, non-governmental organization.

<span class="mw-page-title-main">Generally Accepted Accounting Principles (United States)</span> Accounting principles and rules

Generally Accepted Accounting Principles (GAAP or U.S. GAAP or GAAP (USA), pronounced like "gap") is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC) and is the default accounting standard used by companies based in the United States.

<span class="mw-page-title-main">Paul Volcker</span> American economist (1927–2019)

Paul Adolph Volcker Jr. was an American economist who served as the 12th chairman of the Federal Reserve from 1979 to 1987. During his tenure as chairman, Volcker was widely credited with having ended the high levels of inflation seen in the United States throughout the 1970s and early 1980s, with measures known as the Volcker shock. He previously served as the president of the Federal Reserve Bank of New York from 1975 to 1979.

<span class="mw-page-title-main">Arthur Levitt</span> American businessman, journalist and 25th SEC chairman

Arthur Levitt Jr. is the former Chairman of the United States Securities and Exchange Commission (SEC). He served from 1993 to 2001 as the twenty-fifth and longest-serving chairman of the commission. Widely hailed as a champion of the individual investor, he has been criticized for not pushing for tougher accounting rules. Since May 2001 he has been employed as a senior adviser at the Carlyle Group. Levitt previously served as a policy advisor to Goldman Sachs and is a Director of Bloomberg LP, parent of Bloomberg News.

<span class="mw-page-title-main">Maurice R. Greenberg</span> American business executive (born 1925)

Maurice Raymond “Hank” Greenberg is an American business executive and former chairman and chief executive officer of American International Group (AIG).

Benno Charles Schmidt Jr. was an American academic and education executive. From 1986 to 1992, he was 20th president of Yale University. Prior, Schmidt was Dean of the Columbia Law School, Harlan Fiske Stone Professor of Constitutional Law, and chairman of Edison Schools. He lastly served as the chairman of Avenues: The World School, a for-profit, private K-12 school, and as the chairman of the Board of Trustees of the City University of New York (CUNY) from 2003 to 2016.

<span class="mw-page-title-main">Carroll Vincent Newsom</span> American educator

Carroll Vincent Newsom (1904–1990) was an American educator who served as the eleventh NYU president and president of Prentice Hall.

<span class="mw-page-title-main">Martin Lipton</span> American lawyer

Martin Lipton is an American lawyer, a founding partner of the law firm of Wachtell, Lipton, Rosen & Katz specializing in advising on mergers and acquisitions and matters affecting corporate policy and strategy. From 1958–1978 he taught courses on Federal Regulation of Securities and Corporation Law as a lecturer and adjunct professor of law at New York University School of Law.

<span class="mw-page-title-main">Edward Regan</span> American politician

Edward Van Buren Regan was an American politician and public figure from New York State. He was a member of the Republican Party.

<span class="mw-page-title-main">Accounting for leases in the United States</span> US accounting standard

Accounting for leases in the United States is regulated by the Financial Accounting Standards Board (FASB) by the Financial Accounting Standards Number 13, now known as Accounting Standards Codification Topic 840. These standards were effective as of January 1, 1977. The FASB completed in February 2016 a revision of the lease accounting standard, referred to as ASC 842.

<span class="mw-page-title-main">Charles Noski</span> American business executive

Charles H. Noski was the Chairman of the Board of Directors of Wells Fargo & Company from March 2020 to August 2021. He previously held a variety of positions, including the position of CFO at AT&T, Bank of America, and Northrop Grumman, as well as the positions of director and chairman of the audit committee of Microsoft.

The International Accounting Standards Board (IASB) is the independent accounting standard-setting body of the IFRS Foundation.

<span class="mw-page-title-main">Annual comprehensive financial report</span>

An Annual Comprehensive Financial Report, formerly called Comprehensive Annual Financial Report (CAFR)) is a set of U.S. government financial statements comprising the financial report of a state, municipal or other governmental entity that complies with the accounting requirements promulgated by the Governmental Accounting Standards Board (GASB). GASB provides standards for the content of a Comprehensive Annual Financial Report in its annually updated publication Codification of Governmental Accounting and Financial Reporting Standards. The U.S. Federal Government adheres to standards determined by the Federal Accounting Standards Advisory Board (FASAB).

James J. Leisenring is a retired member of both the International Accounting Standards Board, based in London, and the Financial Accounting Standards Board, based in Norwalk, Connecticut.

Teresa S. Polley was president and chief operating officer of the Financial Accounting Foundation from 2008 to 2019. The FAF is the private, non-profit organization responsible for administration and oversight of the Financial Accounting Standards Board, the Governmental Accounting Standards Board, and their advisory councils.

In US accounting practices, the Accounting Standards Codification (ASC) is the current single source of United States Generally Accepted Accounting Principles (GAAP). It is maintained by the Financial Accounting Standards Board (FASB).

<span class="mw-page-title-main">Elmer B. Staats</span>

Elmer Boyd Staats was an American public servant whose career from the late 1930s to the early 1980s was primarily associated with the Bureau of the Budget (BOB) and the GAO. Staats was born to Wesley F. and Maude (Goodall) Staats. Staats received his AB from McPherson College in 1935, his MA from the University of Kansas in 1936, and his Ph.D. from the University of Minnesota in 1939.

Narain Dass Gupta is Member of Parliament Rajya Sabha from NCT of Delhi, practicing chartered accountant, and former president of the Institute of Chartered Accountants of India (ICAI). He is a financial policy expert who has written several books on taxation.

References

  1. 1 2 3 Allan, John H. (April 30, 1972), "CORPORATE SPOTLIGHT", The New York Times , New York City, p. Section F, Page 7, retrieved July 23, 2023
  2. 1 2 3 Allan, John H. (August 1, 1972), "Accounting Field Selects Head of New Foundation", The New York Times , New York City
  3. ↑ "C.P.A. COUNCIL BACKS NEW STANDARDS UNIT", The New York Times , New York City, May 3, 1972, retrieved July 23, 2023
  4. ↑ Brennan, John J. (June 30, 2022), Marking a Half-Century of Capital Markets Integrity, Barron's , retrieved July 23, 2023
  5. ↑ "Business Briefs", The New York Times , New York City, October 13, 1972, retrieved July 23, 2023
  6. 1 2 3 4 Cowan, Alison Leigh (October 31, 1989), "Change in Accounting Rules Backed", The New York Times , New York City, p. Section D, Page 8
  7. 1 2 3 Leigh Cowan, Alison (January 25, 1991), "Accounting Group Is Facing New Deficits, Official Says", The New York Times , New York City, p. Section D, Page 3, retrieved July 23, 2023
  8. 1 2 Berg, Eric N. Berg (August 18, 1985), "THE F.A.S.B. COMES UNDER FIRE", The New York Times , New York City, p. Section 3, Page 4, retrieved July 21, 2023
  9. ↑ Leigh Cowan, Alison (November 6, 1989), "Business and the Law; A Bitter Schism In Accounting", The New York Times , New York City, retrieved July 23, 2023
  10. ↑ Norris, Floyd (July 2, 1996), "New Structure Agreed On For Accounting Foundation", The New York Times , New York City, retrieved July 23, 2023
  11. 1 2 Abelson, Reed (June 24, 1997), "New Chairman Is Reportedly Chosen for Accounting Board", The New York Times , New York City, p. Section D, Page 8, retrieved July 23, 2023
  12. ↑ Holusha, John (September 7, 2005), "Recent Lease", The New York Times , New York City, retrieved July 23, 2023
  13. ↑ Sanati, Cyrus (August 24, 2010), "F.A.S.B. Chairman Plans to Retire", The New York Times , New York City, p. 54, retrieved July 23, 2023
  14. ↑ Soule, Alexander (September 7, 2022), Company with 500 CT employees set to split. Here’s what it means., CT Insider, retrieved July 28, 2023
  15. ↑ Gaetano, Chris (February 27, 2023), FAF launches free online GAAP and GARS libraries, Accounting Today, retrieved July 28, 2023
  16. ↑ Cohn, Michael (April 26, 2023), FAF makes it easier to complain about FASB, GASB, Accounting Today, retrieved July 29, 2023
  17. ↑ "Overview". www.fasb.org.
  18. ↑ Williams Walsh, Mary (June 2, 2007), "Connecticut Takes Up Fight Over Accounting Rules", The New York Times , New York City, retrieved July 23, 2023
  19. ↑ Soule, Alexander (January 9, 2015), Agency keeps watch on accounting standards, NewsTimes , retrieved July 28, 2023
  20. ↑ "FAF appoints Auchincloss to serve as executive director". Journal of Accountancy. 2020-02-27. Retrieved 2020-03-03.
  21. ↑ Norris, Floyd (December 23, 2010), Accounting Board Puts Interim Head in Lead Spot, The New York Times , retrieved July 29, 2023
  22. ↑ FAF names new trustees, Accounting Today, December 23, 2016, retrieved July 28, 2023
  23. ↑ Cohn, Michael (April 22, 2019), Noski to chair FAF until end of year, Accounting Today, retrieved July 29, 2023
  24. ↑ Hall, Phil (November 16, 2022), Edward C. Bernard to chair Financial Accounting Foundation’s board of trustees, Westfair Business Journal, retrieved July 29, 2023
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.