Question

Explain how levying the accounting support fee, as opposed (for example) to relying upon individual corporate donations, helps maintain FASB’s independence

Answer 1

The critical task of setting account standards is the responsibility of the Financial Accounting Standards Board (FASB)

The FASB derives its authority to set accounting standards from the U.S. Securities and Exchange Commission (SEC). The standards issued by the FASB are officially recognized as authoritative by the SEC, as well as the American Institute of Certified Public Accountants (AICPA).

Investors, lenders, and other users of financial information rely on financial reporting based on U.S. GAAP to make decisions about how they allocate their capital and to help financial markets operate as efficiently as possible.

The FASB is one component of a non-profit standard-setting group that is autonomous of any business or government body.

The FASB comprises seven full-time board members that are appointed by the FAF Board of Trustees. Members may serve up to two five-year terms. A professional staff of more than 60 people supports the FASB. Board members and staff are focused on the needs of investors, other capital markets participants, and the public interest when it comes to financial accounting and reporting.

The non-profit FASB is funded primarily through accounting support fees, which are paid by U.S. corporations that issue publicly-traded securities. This funding method was written into the Sarbanes-Oxley Act of 2002, as amended (the Sarbanes-Oxley Act). The FASB also receives revenue from the sales of subscriptions and publications.

As indicated above the accounting standard have wide usage to investor, companies & others. The FASB requires funds to meet it's objective as they employ professional staff to full their objective.

If the donation is allowed from corporate, the corporate might be in position to influence the board member and employees of FASB which may impact independence of FASB.