international accounting arena to assist in the development and promotion of high-
quality, globally accepted accounting standards; to be proactive in identifying new and
emerging financial reporting issues; and to ensure that U.S. interests are suitably
addressed in the development of those standards. The Staff believes that the FASB
would be the existing body best equipped to fulfill this role in support of U.S.
constituents under the framework and, in many ways, is already positioned to do so.
Serving in its current role as the U.S. national accounting standard setter, the FASB's
mission is "to establish and improve standards of financial accounting and reporting that
foster financial reporting by nongovernmental entities that provides decision-useful
information to investors and other users of financial reports."
Based on the
Commission's recognition of the continuing importance of the FASB, in the event that
the Commission determines to incorporate IFRS, the Staff envisions that the FASB
would remain the standard-setting body responsible for promulgating U.S. GAAP under
For the endorsement aspect of the framework, the FASB would continue to participate in
the development and improvement of accounting standards that foster high-quality
financial reporting that provides decision-useful information to investors and other users
of financial reports. However, the manner of participation as contemplated in the
framework would differ considerably from the FASB's current standard-setting role and
responsibilities for U.S. issuers. Most significantly, the FASB would participate in the
process for developing IFRS, rather than serving as the principal body responsible for
developing new accounting standards or modifying existing standards under U.S. GAAP.
The FASB would play an instrumental role in global standard setting by providing input
and support to the IASB in developing and promoting high-quality, globally accepted
standards; by advancing the consideration of U.S. perspectives in those standards; and by
incorporating those standards, by way of an endorsement process, into U.S. GAAP.
Additionally, the FASB would become an educational resource for U.S. constituents to
facilitate the understanding and proper application of IFRS and promote ongoing
improvement in the quality of financial reporting in the United States.
See FASB's mission statement (available at http://www.fasb.org/facts/index.shtml#mission).
Section 19(b)(1)(B) of the Securities Act specifies that in order to recognize the accounting standards of
a private standard-setting body, the Commission must determine that the body "has the capacity to assist
the Commission in fulfilling" the Commission's authority to prescribe accounting standards "because, at a
minimum, the standard setting body is capable of improving the accuracy and effectiveness of financial
reporting and the protection of investors under the securities laws."
The Staff notes that the FASB's standards are used not only for reporting by public companies but also
for privately-held companies. Therefore, any changes in the role of the FASB may have an impact on the
accounting standards for privately-held companies; however, the Staff believes that the components of
high-quality accounting standards should likely be similar for all companies. The FASB's determination of
whether, and to what extent, there should be modifications to its standards for privately-held companies is
outside the scope of this Staff Paper.