Fasb Case Study

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III. Discussion of the role and purpose of FASB

Financial Accounting Standards Board (FASB) was established since 1973 as a private

organization which assisted by Securities and Exchange Commission (SEC). The FASB

was following only by the United State of America. The FASB was existed to develop

and establish financial accounting and reporting standard. It has role as a guide to help

the users in term of absorbing the useful and valuable financial information to make and

take any decisions (FASB, 2002). In addition, FASB also established to provide the

knowledge for the public who interest with the financial issues with high quality,

transparent, clear, reliable and understandable information.

There are several step in term …show more content…
Third step, the board will start

considering the quality, relevancy and reliability of the information by deliberating the

various reporting issues that have been identified and analyzed by the staff. Fourth step,

FASB will publish the draft to get the feedbacks and advices from the stakeholder and

public. The next step is all the feedback and advices will be brought into the public

roundtable meeting. Then the staff will analyze carefully all the feedbacks, advices,

result from the meeting and all other information. After the carefully considering, the

board will do the redeliberating towards the information in the standards. In the last step,

the FASB will issues the final standard and will keep update the standards based on the

feedback from the user to ensure it meets its objectives.

The FASB does not have the enforcement power toward its standards (FASB, 2003)

Responsibility for ensuring the businesses accept and adopt the accounting standards in

creating their financial statement is the Securities Exchange Commission (SEC). The

FASB also does not have an authority to do the auditing. The only responsibility …show more content…
The example of accrual from the Coca Cola Financial Statement

(Source: Coca Cola Annual Report, 2014)

The examples of the accrual concept in Coca Cola financial statement are the trade

receivable and payables in balance sheet. Why there is trade receivable? It means there

are some transaction that Coca Cola company do not received fully cash payment by

7

their customer. Therefore, it is not recorded as revenue in income statement, even the

products are already received by their consumer instead it recorded as trade receivable

in balance sheet. Similar case with trade payables, it means the company has been

borrowing the money and the company need to pay back the money in the future. It is

because the company not pay back the money yet at the moment, it is not recorded as

expenses in the income statement instead it recorded as trade payable in balance sheet.

The qualitative characteristic of financial information is the basic standard that setting the

conceptual framework of IASB (Nobes; Stadler, 2014). This standard has been defined

into two types of qualitative characteristics which are important in providing the useful

and valuable financial information for users. Firstly, the basic of
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