FASB and COSO

FASB and COSO

Briefly explain the mission or focus of the two organizations you selected and cite at least two sources for your information. Note: Wikipedia and similar websites do not qualify as appropriate sources. It is recommended that you refer to the organizations’ websites or excerpts from their established publications.

COSO is a committee that was created in 1985 to deal with the issue of fraud in organizations. The committee’s main idea is that there is a need to guide and provide advice to entities on the issue of internal control, ethics, and organizational fraud (COSO, n.p). Therefore, their mission and focus are to allow organizations to compare and evaluate their own control for internal business strategies. The actions ensure that organizations are alert and they are in control over their internal operations. The main aim is to ensure that no fraudulent activities occur in the organization’s financial report.

FASB is responsible for reviewing major standards from the post-implementation review (PIR). Their main mission is to review revenue recognition and credit losses. They play a key role in determining the type of assets included in the financial statement as contributing to revenue. The main aim is to ensure that reporting of the financial information is done most effectively and appropriately (FASB, n.p). A key factor is recognizing the credit losses of the organization so that they don’t affect the books of account. Proper recognition of a financial statement’s elements effectively reduces fraud and misappropriation of funds. A key consideration is the dynamics of risk management. There is a protocol that organizations are supposed to use while reporting their financial statements.

Select a topic that one of the organizations is currently focused on, or one that they consider a pressing issue or “hot topic.”

Regarding hot topics, the FASB organization mainly aims to have a disaggregated way of financial reporting. The members of the IAC deal with the internal method of disaggregating the expenses present in the income statement. There has been a variation in the view of members concerning the approach. The general agreement between the members is that the more detailed expense information will be essential in carrying out the trend analysis (FASB, n.p). However, members of the boards show concern about the approach of an internal review to disaggregation. The main claim that arises is that the approach can reduce comparability among the organization, and over time, it would be misleading.

Summarize what the organization you selected is doing to address the issue you identified.

The main objective of the approach is to increase the decision usefulness in all the income statements through disaggregation of the performance information. FASB has taken a step to add a unique agenda to the special mission. The organization’s focus has been on creating a focal point for the disaggregation of the overall performance. There are two approaches that FASB tends to use (FASB, n.p). One is through the assertion of the profits, and the other strategy is through disclosure of the information. In the long run, the global performance declaration will be enhanced by creating a useful plan that can be used to measure the level of performance. The main priority will be on the disaggregation of the total level of performance.

Explain how the issue you identified impacts how financial reports are produced.

The issue identified affects the financial reports’ production since there is no disclosure of the not-for-profit entities, which largely contribute to the non-financial assets. The approach has resulted in a new way of reporting on the information. There is the provision of new presentations and the disclosure of requirements for the non-for-profits. Therefore, the production of the financial reports for FASB has changed so that it is possible to compare. The evaluation can be done between different entities or other organizations in the same production line.

References

Committee of Sponsoring Organizations of the Treadway Commission (COSO). (n.d.). ERM Integrated Framework Update. Retrieved from Welcome to COSO. Accessed 28 February 2021.

Financial Accounting Standards Board (FASB). (n.d.) Technical Agenda. Retrieved from Technical Agenda (fasb.org). Accessed 28 February 2021.

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Where Do the Rules Come From? Who Impacts Accounting?

Throughout your studies, you have heard of the “big names” of the organizations that impact accounting. But what do they really do? How do you know what the hot topics are? How are they influenced? What do they have to do with the financial reports you have been studying all quarter? How could this impact how financial reports are produced?

For example, consider how a change in the way leases are recognized may impact the liabilities on a balance sheet and expenses on an income statement (which would then impact owner’s equity).

For this assignment, select two of the organizations below.

• FASB
• PCAOB
• GASB
• SEC
• COSO
• IFRS
• AICPA
• IMA
• IIA
• FEI

Then, write a 2–3 page paper in which you:

1. Briefly explain the mission or focus of the two organizations you selected and cite at least two sources for your information. Note: Wikipedia and similar websites do not qualify as appropriate sources. It is recommended that you refer to the organizations’ websites or excerpts from their established publications.
2. Select a topic that one of the organizations is currently focused on, or one that they consider a pressing issue or “hot topic.”
3. Summarize what the organization you selected is doing to address the issue you identified.
4. Explain how the issue you identified impacts how financial reports are produced.

Your assignment must follow these formatting requirements:

• This course requires the use of Strayer Writing Standards (SWS). For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course.
• Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcome associated with this assignment is:

• Examine a current issue addressed by an industry organization and its impact on financial reporting.