Financial Accounting and Reporting-CPA Practice Exam

What is required for the FASB Board to issue an exposure draft?

1. Approval by two-thirds of the committee members

2. A majority vote from the Board

3. Public consensus through surveys

4. A unanimous vote by the staff

The correct answer is: A majority vote from the Board

For the FASB Board to issue an exposure draft, a majority vote from the Board is essential. This requirement reflects the decision-making process within FASB, where the Board consists of a group of members who collectively work to set accounting standards. Achieving a majority vote ensures that the exposure draft represents a consensus viewpoint among the majority of the Board members, which is important for the legitimacy of the proposed standard and the standard-setting process as a whole. This process allows for diverse opinions to be considered, demonstrating that the exposure draft has undergone rigorous examination and discussion among Board members. Because the aim is to establish accounting standards that will be beneficial to the financial reporting framework, a majority vote helps balance differing perspectives while ensuring that any new guidelines reflect an agreed-upon approach. Other choices involve mechanisms or requirements that do not align with FASB's formal procedures for issuing exposure drafts. For instance, approval by two-thirds of committee members, public consensus through surveys, or a unanimous vote by staff do not reflect the actual voting requirements specified in FASB's protocols. Therefore, the majority vote from the Board is the correct path to facilitating the issuance of an exposure draft.