Which organization is responsible for the creation and governance of accounting standards in the US?

The Federal Accounting Standards Advisory Board (FASAB) is an advisory committee that develops accounting standards for U.S. government agencies. The FASAB is designed to improve government accountability by issuing federal financial accounting and reporting standards that adhere to industry best practices.

The FASAB includes nine members that consists of three federal representatives and six public non-federal members. According to its mission statement, the FASAB:

• Considers the costs and the benefits of financial information prepared in conformity with generally accepted accounting standards.
• Ensures participation by a variety of stakeholders throughout the federal accounting standards-setting process.
• Provides accounting standards implementation guidance through both formal and informal communication with preparers and auditors.
• Develops accountability through transparent, consistent government practices that adhere to the memorandum of understanding in use among its sponsors.

The FASAB follows an open process for considering federal accounting standards that includes the following steps:

1. Identification of accounting issues and agenda decisions.

2. Preliminary deliberations.

3. Preparation of initial documents.

4. Release of the documents to the public for comment, as well as public hearings when necessary.

5. Further deliberations to consider comments.

6. Approval by at least a two-thirds majority affirmative vote.

7. Submit a proposed statement to principals for review.

8. Publication of final statement or interpretation.

After the FASAB concludes deliberations and submits the proposal to sponsors, the sponsors have 90 days to review it. Following this period, if neither the director of the Office of Management and Budget or the Comptroller General object to the proposal, it is published by the FASAB and becomes generally accepted accounting principles for federal financial reporting entities.

This was last updated in December 2013

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