By LeaseCrunch® on March 14, 2022 at 3:53 PM
In the world of accounting, there is a triumvirate of organizations that continually define and update lease accounting standards for various entities.
This triumvirate is composed firstly and secondly of the notable Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). To learn more about both of these organizations, click here for information on the former, and here for information on the latter.
The third leg of this powerful trio is the Financial Accounting Foundation, or FAF, which is celebrating its 50th year of existence this year.
This organization has bearing on both the GASB and FASB in a few different but very important ways. So let’s dive in and learn more about this organization and its duties.
What is FAF (Financial Accounting Foundation)?
The Financial Accounting Foundation is an independent, not-for-profit organization that was established in 1972.
The organization is comprised of a board of trustees, two standard-setting boards, and the FAF management team. Although the structure of the Financial Accounting Foundation is unique, they share a joint mission statement with the FASB and GASB, which involves establishing and improving financial accounting reporting standards to the benefit of investors and others who utilize financial reports. The FAF, FASB, and GASB all have different roles and responsibilities in order to strive towards achieving the sentiment around this mission statement.
What Does the Financial Accounting Foundation Do?
Each component of the Financial Accounting Foundation plays a slightly different role in the greater scheme of the organization and the pursuit of its mission.
In general, the Financial Accounting Foundation is responsible for the oversight, administration, financing, and appointing of the members of the FASB and GASB.
The FAF management team specifically provides strategic counsel and services that support the work of their two standards-setting boards.
The FAF board of trustees have a different role: that of providing oversight and promoting an independent and effective standard-setting process.
Who are the FAF Trustees?
The FAF board of trustees has 14-18 members who have various backgrounds in auditing, preparing, and using financial statements; state and local government officials; and regulators. These individuals are the stewards of the FASB and GASB, ensuring these entities carry out their missions.
The board of trustees also selects and appoints FASB and GASB members and their councils, oversee the boards; activities and due processes, and promote the independence of the boards.
You can view the complete list of trustees in the middle of this page on the FAF website:
How are the FAF Members Nominated?
The ideal FAF member candidate is to be highly-regarded in their profession, understands US and global financial markets, and has an appreciation for the investment community and the public at large.
Furthermore, candidates are expected to have background and experience in one or more roles such as investor, CEO, or CFO of a private, public, or not-for-profit organization.
Interested and qualified candidates can send their resumes and CV’s to the FAF for consideration.
Who Funds the FAF?
The FAF is funded by a combination of publishing revenue, accounting support fees, and investment income; however, the bulk of their income comes from accounting support fees paid by publicly-traded companies.
Publishing revenue includes the sales and licensing of copyrighted FASB- and GASB-related materials. Things like the FASB Codification and GASB materials are available for purchase on a subscription basis.
Need Help Staying Up-to-Date with FAF, FASB, and GASB Rules?
You should try LeaseCrunch for free! LeaseCrunch is a lease accounting software that can help your company stay compliant with the lease accounting requirements and rules enacted by the FAF, GASB, and FASB as a part of their mission fulfillment. Our software helps your lease accounting stay error-free and compliant, and gives companies the choice of using spreadsheets or going paperless.
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