Question

Why does FASB undertake series of elaborate information-gathering steps before issuing substantive accounting standard?

Answer 1

FASB undertakes a series of elaborate information-gathering steps before issuing substantive accounting standards for several reasons, including seeking public input, conducting thorough research, and promoting transparency and accountability in the standard-setting process.

Step-by-step explanation:

The Financial Accounting Standards Board (FASB) undertakes a series of elaborate information-gathering steps before issuing substantive accounting standards for several reasons:

1. Public Input: FASB seeks input from various stakeholders such as investors, auditors, and preparers of financial statements in order to gather diverse perspectives and ensure that the proposed standards address the needs of the financial reporting community.
2. Thorough Research: FASB conducts detailed research and analysis to understand the practical implications of potential accounting standards. This includes studying existing practices, conducting field tests, and considering real-world scenarios to accurately assess the impact of the proposed standards.
3. Transparency and Accountability: The information-gathering steps undertaken by FASB promote transparency and accountability in the standard-setting process. By involving stakeholders and conducting extensive research, FASB ensures that accounting standards are well-founded, reliable, and supported by evidence.

Overall, these information-gathering steps allow FASB to develop accounting standards that are relevant, reliable, and beneficial to the users of financial information.