What is the role of the Financial Accounting Standards Board (FASB)?

The Financial Accounting Standards Board (FASB) plays a crucial role in the financial reporting landscape by establishing financial accounting standards. This responsibility includes developing and maintaining a set of principles that govern how financial statements are prepared and presented. These standards, known as Generally Accepted Accounting Principles (GAAP), serve to ensure consistency, transparency, and comparability in financial reporting across different organizations and industries.

By setting these standards, FASB helps ensure that stakeholders—such as investors, creditors, and regulators—receive reliable financial information, which is essential for making informed economic decisions. The establishment of a unified framework for accounting practices allows for greater trust in the financial statements published by companies. Unlike other potential roles, such as improving profitability, managing corporate taxes, or auditing public companies, the FASB's central focus is on standard-setting rather than direct involvement in corporate operations or compliance activities.