Chapter 5 FASB Operations b Understand the due

Chapter 5 FASB Operations b Understand the due process procedures. b Evaluate the operations of the FASB. b Be aware of the role of politics in standard setting.

FASB Operation Due Process Procedure b Due Process: Introduction b What is it? b Characterized as…. ? b Modeled after …? b Six steps: Ex. 5. 2 & Updates • FASB 2002 Process Effectiveness Initiative • Convergence

Due Process: Evaluation b What’s this sound like…. . ? b déjà vu- address past concerns ?

Participating in Due Process b Many opportunities b Serious issue with… b Effectiveness varies • Examples: book

Output of FASB b Statements of Financial Accounting Standards (SFAS) Not FASB’s! • GAAP b Interpretations • clarify, explain, elaborate on GAAP b Statements of Financial Accounting Concepts (SFAC): The CF b Technical Bulletins • not passed through FASB • subordinated GAAP: sharp focus

Evaluating the FASB b Beresford’s “Big 8” Criticisms. Responded to the eight major general criticisms of FASB at request of FAF. b What do the general criticisms reveal?

Evaluating FASB b Slow • Insubstance Debt defeasance b Voting: What’s Generally Accepted? • The yo-yo: (1973) 5/2, (1978) 4/3, (1990) 5/2, (2002) 4/3…. . b The Conceptual Framework-later

FASB Politics b 3 Levels b Effects of politics b Three national political experiences…. .

National Political Experiences b #1: 1970 s-now, A) Congress and B) Preparers b #2: 1970 s, Oil & Gas b #3: 1990 s-now, Stock Options

Conclusion: Politics Discussion b b b Consider the three national political experiences of the FASB. Assess the FASB on each: how did they come out? Assess overall: too much politics, about expected, or less than expected. If too much, any suggestions for FASB to lessen politics? What do examples show for the future?