1) BUILDING A BETTER GAAP 2014 Annual Report 

2) 2014 ANNUAL REPORT BUILDING A BETTER GAAP THE BLUEPRINT Building a Better GAAP: The Blueprint 1 A Note from the FAF 2 A Note from the FASB 2 A Note from the GASB 3 The Financial Accounting Foundation (FAF) and its standard-setting Boards— FAF Highlights 4 the Financial Accounting Standards Board (FASB) and the Governmental FASB Highlights 6 Accounting Standards Board (GASB)—spent much of 2014 developing a GASB Highlights 8 new Strategic Plan that will serve as a blueprint for how the three groups will work together in the next few years to improve Generally Accepted FASB Publications 10 GASB Publications 11 Strategic Plan: Vision 12 GAAP financial reports communicate key information about the financial Strategic Plan: Mission 13 position and operation of companies (both public and private), not-for-profit Strategic Plan: Goals 14 organizations, and state and local governments. These financial reports FAF Board of Trustees 18 FASB & GASB Members 20 PCC & EITF 21 FASAC 22 GASAC 23 FASB Advisory Groups 24 Financial Highlights 26 Accounting Principles, or GAAP. enable investors, lenders, and other creditors to make better-informed decisions about where and how they allocate their capital—and make it Photos of for citizensthe four leaders on that page somehow (with possible each of and taxpayers to evaluate the financial performance name captions): Teresa S. Polley, Russell G. Golden, David A. of their governments. Vaudt, and Jeffrey J. Diermeier. They can be four headshots. I think we should use the ones Mike Stog took (and which I selected new Strategic Plan will guide the FASB, the GASB, the FAF Board of The and sent along yesterday). You can put all four across the top, or two across the top (Russ and Dave) and Terri and Trustees, each FAF management team—according to their specific roles— Jeff D. on and theside. as they work to achieve their principal objective of developing the highestquality financial accounting standards. In short, this blueprint will help the FAF, the FASB, and the GASB build a better GAAP. 2 Financial Accounting Foundation 2014 Annual Report 1 

3) The Financial Accounting Foundation (FAF)—through its Board of Trustees and its management team—in 2014 focused on supporting the work of its standard-setting Boards, the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB), as they worked to improve Generally Accepted Accounting Principles (GAAP). The FAF conducted a broad-based organizational design review, appointed new Trustees, reappointed a GASB member, collaborated with the FASB and the GASB on the 2015 Strategic Plan, and initiated a threeyear review of the Private Company Council (PCC). All of these initiatives were undertaken to support the work of the FASB and the GASB in improving GAAP. The organizational design review was intended to ensure that the FAF has the right systems, processes, policies, and structure in place to appropriately and effectively support the FASB and the GASB in achieving their mission. That assessment identified opportunities for improvement in four main categories: people, process, technology, and organization. In the area of “people”—and to facilitate these recommended improvements—the FAF welcomed Mary Crotty to the newly-created role of Chief Operating Officer. Mary joined us in November with an extensive background in corporate operations and governance. Also in November, the FAF reinstated the role of GASB vice chair, in part because of our strategic focus on expanding outreach to stakeholders. GASB member Jan Sylvis, retired chief of accounts for the state of Tennessee, was appointed to the new role. David E. Sundstrom was reappointed to a second term on the GASB. In mid-2014, the FAF Trustees welcomed Gary Bruebaker, chief investment officer for the Washington State Investment Board in Olympia, Washington. Joining the Trustees in 2 Financial Accounting Foundation early 2015 were Myra Drucker, who serves as an independent director and chairs the Risk and Audit Committee of Grantham, Mayo, Van Otterloo & Co. LLC, and John Veihmeyer, who is Global Chairman of KPMG and Chairman and CEO of KPMG in the U.S. Completing their service in 2014 were Trustees Jack Brennan, Teri List-Stoll, Ed Nusbaum, and Luis Viceira. Following a year-long effort by the leadership and senior staff of the FAF, the FASB, and the GASB, the organization in April 2015 issued our Strategic Plan, a planning “blueprint” for the next few years. The initial draft plan, issued in December, generated many thoughtful comments. Those perspectives helped shape the final plan, which is described in the following pages of this report. In late 2014, members of the Trustees’ Private Company Review Committee conducted initial outreach prior to launching, in early 2015, the three-year PCC review. Our February 2015 Request for Comment invites stakeholders to weigh in on the PCC’s effectiveness, accomplishments, and its future role in setting standards for private companies. With the departure at the end of 2015 of PCC Chairman Billy Atkinson, who successfully led the Council during its first three years, along with several other charter PCC members, the FAF is seeking new private company stakeholders to serve on the Council. On behalf of the FAF Board of Trustees and management team, we thank you for your continued support for and participation in the independent standard-setting process. Together, we will continue to work to build a better GAAP. Jeffrey J. Diermeier Chairman Financial Accounting Foundation Teresa S. Polley President and CEO Financial Accounting Foundation April 2015 For more than 40 years, the Financial Accounting Standards Board (FASB) has dedicated itself to improving Generally Accepted Accounting Principles (GAAP), the standards that govern how companies—both public and private—and notfor-profit organizations report their finances. That mission was reaffirmed in the 2015 Strategic Plan issued in April. In 2014, we worked to build a better GAAP by improving revenue recognition, revising our agenda to focus on reducing complexity, and strengthening our relationships with other standard setters around the world. At the same time, we looked ahead to identify the major accounting issues that we will address next. The FASB in May 2014 issued milestone guidance to improve how companies and other organizations recognize revenue in contracts with customers. To ensure a smooth transition to the new standard, the FASB and the International Accounting Standards Board (IASB) established the Revenue Recognition Transition Resource Group (TRG) to alert the Boards to implementation issues that may arise among companies and other organizations. Thanks in part to the TRG’s input, the FASB is considering improvements to the implementation guidance for licenses of intellectual property, and to the guidance for performance obligations. We also have exposed for public comment a proposal to defer the standard’s effective date to ensure that companies and organizations can make the necessary changes in their reporting systems. The FASB also addressed stakeholder concerns about unnecessary complexity in accounting, refocusing our agenda with a mix of new projects intended to address this issue on various fronts. They include foundational projects that focus on long-term standard-setting goals; broad projects that address recognition and measurement, and presentation and disclosure; and shortterm projects targeting immediate areas of improvement. We made significant progress on broad projects such as leases and financial instruments, as well as on foundational projects addressing the Conceptual Framework and the Disclosure Framework. We also initiated a number of short-term simplification projects covering issues ranging from measurement of inventory to presentation of debt issuance costs. Our work with the Private Company Council (PCC) to simplify and increase the relevance of financial reporting for private companies led to a broader review of how we can simplify standards for all companies and organizations. For example, a PCC consensus—and later, final FASB standard—to simplify goodwill impairment for private companies led to an agenda project to consider extending these improvements to public companies and not-for-profit organizations. Increasing comparability across international borders remained a priority. We continued to collaborate with the IASB and more formally engaged with national standard setters from North America, Europe, and Asia to pursue our objective of working with others to develop financial accounting standards that have the fewest possible differences across different jurisdictions. . Finalizing our major projects on financial instruments and leases—and ensuring a smooth transition to the ensuing new guidance—will be a priority through 2015 and early 2016. The FASB also will look at what other comprehensive projects should be added to its future agenda. Late in the year, we will issue a Discussion Paper asking all stakeholders to weigh in on what these projects should be. Building a better GAAP is a collaborative work in progress. Your input helped us improve the revenue recognition standard and identify and address areas of unnecessary complexity in GAAP. It also helped shape our approach to creating more comparable global accounting standards. By continuing to share your views, you help ensure we address the right issues. Russell G. Golden Chairman Financial Accounting Standards Board April 2015 In 2014, the GASB celebrated our 30th anniversary. Former and current Board members and staff gathered at a dinner to reflect on the past, but more importantly, consider the challenges of the future. Our foremost challenge is to continue to improve financial accounting standards—Generally Accepted Accounting Principles, or GAAP— for state and local governments. Our mission to build a better GAAP for governments is more relevant than ever. During 2014, we worked to improve financial accounting and reporting by addressing issues related to retiree healthcare benefits, fair value reporting, the disclosure of tax abatement agreements, and governmental business-type activities. We conducted research and outreach on our financial reporting model. We also broadened our efforts to engage in a dialogue with stakeholders, while educating those stakeholders about changes that will result from the implementation of our new pension standards. During the year, the GASB issued proposed guidance on other postemployment benefits that mirror the advances recently achieved for pensions—including displaying the net liability in the financial statements. Improving this area of state and local government financial reporting will allow financial statement users to better gauge a government’s current financial position and the costs associated with these benefits. In 2014, the GASB issued a proposal that would result in a broader application of fair value reporting for investments. A final Statement on this topic was finalized early in 2015. The Board also issued a proposal to require governments to disclose information about their tax abatement agreements. While many governments have such agreements in place, information regarding the impact of these agreements is not currently provided in the financial statements. The Board also focused on a number of issues (for example, asset retirement obligations) associated with governmental business-type activities. These efforts are expected to result in three proposed Statements in 2015. The Board continued to collect stakeholder input for its pre-agenda research on a potential re-examination of the financial reporting model. The input will help the Board evaluate the model’s overall effectiveness—and whether the Board should add an agenda project to improve it. Since issuing new pension guidance in 2012, the Board has actively engaged in educating stakeholders about the new standards. To further those efforts, the GASB continued to participate in presentations around the country, provide assistance on technical inquiries, issue implementation guidance, and develop website resources. In addition, the GASB worked with key stakeholder organizations to establish the Pension Communication Resource Group. Since joining the Board, I have made it a priority to broaden and strengthen the Board’s stakeholder relationships. We are encouraged by the progress that we have made in working with organizations that could have an important voice in our process. This approach is enabling us to achieve a better understanding from a wider perspective—and opens the door for enhanced feedback throughout the standardsetting process. The momentum of 2014 will help us complete the important work we began while addressing the challenges to come. I look forward to working with the GASB’s new vice chair, Jan Sylvis, in addressing those challenges. On behalf of the Board, I would like to express my thanks to all of the stakeholders who participated in the GASB’s due process and other outreach efforts. Your contributions to our process are vital to building a better GAAP. David A. Vaudt Chairman Governmental Accounting Standards Board April 2015 2014 Annual Report 3 

4) FAF HIGHLIGHTS FAF, FASB, GASB Develop 2015 Strategic Plan FAF Completes Three Post-Implementation Reviews The FAF, the FASB, and the GASB in 2014 initiate a process that leads to the release earlier this year of the 2015 Strategic Plan. The goal: to establish clearly articulated, easily understood statements of the vision, mission, and top priorities of the FAF, the FASB, and the GASB individually and collectively, while affirming the principal objective of developing the highest-quality financial accounting standards. FAF President and CEO Terri Polley calls the draft plan “an opportunity to initiate a dialogue about our vision, not only internally, but also with our stakeholders, and then craft a high-level planning document to guide us as we move forward in the months and years ahead.” As part of the Trustees’ ongoing efforts to evaluate the effectiveness of the standardsetting process, the FAF continues its postimplementation reviews (PIRs) of FASB and GASB standards to assess whether they are meeting their objectives. The FAF in 2014 issues PIR findings in reports for three standards. FASB Statement No. 157, Fair Value Measurements—which establishes a framework for measuring fair value within GAAP—is found to generally achieve its purpose. FASB Statement No. 123(R), ShareBased Payment—which addresses companies’ share-based payment transactions—is found to achieve its purpose and provide useful information to users of financial statements. And GASB Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries—which addresses the impairment of capital assets and insurance recoveries—is found to resolve some but not all of the issues underlying its purpose. Based on stakeholder feedback on the draft plan, which was posted in December 2014, the final plan is issued on April 9, 2015. FAF Begins Three-Year Review of the Private Company Council The FAF Board of Trustees in 2014 begins its three-year review of the Private Company Council (PCC). The goal is to determine whether the PCC is meeting its primary responsibilities and mission, provide an assessment of the PCC’s continuing role and effectiveness, and address changes that might be made to its processes. The Trustees identify possible improvements to the PCC based on initial informal feedback, and issue a draft assessment for public comment on February 26, 2015. FAF Adds New Leadership to Its Management Team, Appoints New Trustees Following completion of a broad-based organizational design review, the FAF in 2014 creates the new role of Chief Operating Officer to manage the Foundation’s business operations, including technology, finance, publications, and other key activities. Mary P. Crotty, a former Bank of America executive with an extensive background in corporate operations and governance, joins the FAF in that role in November. In June, Washington State Investment Officer Gary H. Bruebaker joins the FAF Board of Trustees, filling a role left vacant by the retirement of former FAF Chairman and Vanguard Chairman Emeritus John J. Brennan. In December, Myra R. Drucker and John Veihmeyer are named as new Trustees to replace Luis M. Viceira and Edward E. Nusbaum, whose terms concluded on January 14, 2015. Ms. Drucker is an independent director with Grantham, Mayo, Van Otterloo & Co. LLC. Mr. Veihmeyer is Global Chairman of KPMG and Chairman and CEO of KPMG in the U.S. Ann Marie Petach, a member of the BlackRock Institutional Trust Company board and secretary and treasurer of the FAF Board of Trustees, is reappointed to a second term. Also, Trustee Teri L. List-Stoll completes her service in December 2014. A replacement will be named in 2015. The FAF, the FASB, and the GASB must continuously earn the right to our status as the independent standardsetting organizations for the United States. We strive to do this by demonstrating our competence, our willingness to listen and learn, and—in the case of the FASB and the GASB— our ability to produce standards that reflect economic information fairly and in the most costefficient manner possible. We do not take this privilege you’ve entrusted to us for granted. FAF President and CEO Terri Polley 4 Financial Accounting Foundation 2014 Annual Report 5 

5) FASB HIGHLIGHTS FASB Issues Final Revenue Recognition Standard and Creates Transition Resource Group The FASB and the International Accounting Standards Board (IASB) on May 28, 2014 issue converged guidance on recognizing revenue in contracts with customers. Accounting Standards Update No. 2014-09—Revenue from Contracts with Customers (Topic 606) eliminates a major source of inconsistency in GAAP, replacing many disparate, industryspecific instances of revenue recognition guidance with one principles-based standard. FASB Chairman Russ Golden calls the standard “a milestone in our efforts to improve and converge one of the most important areas of financial reporting.” Shortly thereafter, the FASB and the IASB announce the members of the new joint Revenue Recognition Transition Resource Group, tasked with informing the Boards of potential implementation issues that could arise when companies and organizations implement the new standard. FASB Continues Efforts on International Cooperation The FASB in 2014 continues to collaborate and cooperate with the IASB and national standard-setters with the goal of adopting accounting standards that have the fewest possible differences. The FASB continues to actively participate in the IASB’s Accounting Standards Advisory Forum (ASAF). In addition, the FASB strengthens its existing relationships with other standard setters to promote a broader flow of information and ideas that mutually informs each other’s thinking and contributes to an environment that will foster greater comparability. 6 Financial Accounting Foundation FASB Issues Four Accounting Alternatives Based on Private Company Council (PCC) consensuses, the FASB issues four alternatives that simplify GAAP for private companies. These alternatives address hedge accounting, the application of variable interest entity (VIE) guidance, and the measurement of certain customer-related intangible assets and non-competition agreements in a business arrangement. A fourth alternative that allows for the amortization of goodwill and simplifies the goodwill impairment test prompts the FASB to add a project to its agenda that would simplify this area of financial reporting for public companies and not-for-profits as well as private companies. FASB Launches New Communication Tools for Stakeholders The FASB launches a new quarterly e-newsletter, the FASB Outlook, which presents current accounting and financial reporting issues in a “plain-English” format. It also debuts a new user-friendly technical agenda format. The FASB Taxonomy staff continues to educate stakeholders on the use of XBRL, presenting a March 2014 webcast on structured data in financial reporting that features FASB Member Hal Schroeder and Kimberly Earle of the U.S. Securities and Exchange Commission. FASB Issues Guidance to Improve Financial Reporting of Discontinued Operations, Repurchase Agreements, and Going Concern Uncertainties April 2014: FASB Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, changes the criteria for reporting discontinued operations while enhancing disclosures in this area, eliminating sources of inconsistency in GAAP. June 2014: FASB Accounting Standards Update No. 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, changes the accounting for repurchase-tomaturity transactions and repurchase financing arrangements. It also requires enhanced disclosures about repurchase agreements and other similar transactions. August 2014: FASB Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. FASB Resets Its Agenda to Address Complexity The FASB reassesses its priorities to address the financial reporting issues of greatest importance to stakeholders. The focus of much of this effort is to reduce complexity in accounting and financial reporting. To that end, the Board adds to its technical agenda a mix of new projects intended to address complexity on various fronts. They include foundational projects that focus on long-term standard-setting goals; broad projects that address recognition and measurement, and presentation and disclosure; and short-term projects targeting immediate areas of improvement. The FASB also launches a tightly-focused simplification initiative to make narrow-scope improvements to accounting standards through a series of short-term projects—without compromising the usefulness of information reported to investors. Projects added to the agenda include simplifying the measurement of inventory, presentation of debt issuance costs, measurement date of defined benefit pension plan assets, cloud computing fees, and accounting for income taxes. FASB members and staff deliver more than 100 speeches and presentations to various stakeholder groups, covering topics that include the FASB’s agenda reprioritization, simplification initiative, and cost-benefit considerations in the standard setting process. 2014 Annual Report 7 

6) GASB HIGHLIGHTS GASB Proposes Revised Guidance on Retiree Health Care Benefits GASB Educates Stakeholders on New Pension Standard Requirements The GASB in June 2014 issues two proposed Statements on other postemployment benefits (OPEB). The proposed Statements, which primarily address health care benefits, are intended to provide a more complete picture of the liabilities associated with non-pension retiree benefits that governments have promised to employees and how much those promises are expected to cost. The GASB in 2014 conducts extensive outreach to auditors, preparers, and financial statement users to educate them about the changes and benefits associated with the GASB’s 2012 pension standards. Mirroring modifications to the GASB’s 2012 pension standards, the proposed standards call for the placement of the OPEB liability on the face of the financial statement and will provide enhanced note disclosures, including more comprehensive information about the benefits provided. The final Statements are scheduled to be released in June 2015. GASB Proposes Revised Guidance on Fair Value Reporting In May 2014, the GASB issues a proposed Statement on fair value. This Exposure Draft proposes both measurement and application guidance. The measurement guidance proposes valuation techniques and approaches and a hierarchy of inputs to valuation techniques used to measure fair value. The application guidance will result in a wider range of investments being reported at fair value in a government’s financial statements and enhance note disclosures related to fair value measurements. In the first half of 2014, the GASB issues an implementation guide for governments which, taken with the guide for pension plans issued in 2013, answers questions and provides examples for those who will be implementing the new standards. The level of importance associated with implementation guides in the GAAP hierarchy is addressed in a separate project. A final Statement on the hierarchy is expected to be issued in June 2015. The Board and staff throughout the year conduct outreach and educational activities and provide additional assistance—presentations, videos, articles, and tool kits—to aid preparers, auditors, and financial statement users in understanding the pension Statements. The GASB also assembles the Pension Communication Resource Group (PCRG) to promote a better understanding of the changes. The PCRG, which comprises a cross-section of strategically selected GASB stakeholder organizations, develops communication tools to help governments answer the questions they likely will receive from elected officials, citizens, bond analysts, and the news media. GASB Conducts Research on Potential Re-examination of Financial Reporting Model Building on its 2013 pre-agenda research, including a series of roundtables, the GASB staff in 2014 conducts surveys for auditors, preparers, and financial statement users on a potential re-examination of the financial reporting model for state and local governments. The review and analysis of the results from these surveys provide the basis for dozens of subsequent interviews across all three stakeholder groups. The Board will use the input received to develop a comprehensive assessment of the model’s effectiveness in practice, usefulness, understandability, and cost/benefits. The Board is expected to consider adding a project on the financial reporting model to its current agenda in 2015. As we begin to move into the second generation of the GASB, we find a world that is more immediate, more fragmented, more specialized, and more challenging than any of us might have previously envisioned. We will undoubtedly be challenged to write standards that tackle emerging issues and new transactions in an ever-changing landscape. GASB Chairman Dave Vaudt A final Statement on fair value is issued in February 2015. 8 Financial Accounting Foundation 2014 Annual Report 9 

7) Accounting Standards Update No. 2014-06 Technical Corrections and Improvements Related to Glossary Terms [March 2014] Accounting Standards Update No. 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity [April 2014] Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (Topic 606) [May 2014] Accounting Standards Update No. 2014-10 Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation [June 2014] Accounting Standards Update No. 2014-11 Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures [June 2014] Accounting Standards Update No. 2014-15 Presentation of Financial Statements—Going Concern (Subtopic 20540): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern [August 2014] FINAL STANDARDS RESULTING FROM PRIVATE COMPANY COUNCIL (PCC) CONSENSUSES Accounting Standards Update No. 2014-02 Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill (a consensus of the Private Company Council) [January 2014] Accounting Standards Update No. 2014-03 Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps—Simplified Hedge Accounting Approach (a consensus of the Private Company Council) [January 2014] Accounting Standards Update No. 2014-07 Consolidation (Topic 810): Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements (a consensus of the Private Company Council) [March 2014] FINAL STANDARDS RESULTING FROM EMERGING ISSUES TASK FORCE (EITF) CONSENSUSES Accounting Standards Update No. 2014-01 Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects (a consensus of the FASB Emerging Issues Task Force) [January 2014] Accounting Standards Update No. 2014-04 Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force) [January 2014] Accounting Standards Update No. 2014-05 Service Concession Arrangements (Topic 853) (a consensus of the FASB Emerging Issues Task Force) [January 2014] Accounting Standards Update No. 2014-12 Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force) [June 2014] GASB PUBLICATIONS FASB PUBLICATIONS FINAL STANDARDS EXPOSURE DRAFTS CONCEPTS STATEMENTS Exposure Draft Fair Value Measurement and Application [Approved by the Board: May 15, 2014] Concepts Statement No. 6 Measurement of Elements of Financial Statements [Issued March 2014] Exposure Draft Accounting and Financial Reporting for Pensions and Financial Reporting for Pension Plans That Are Not Administered through Trusts That Meet Specified Criteria, and Amendments to Certain Provisions of GASB Statements 67 and 68 [Approved by the Board: May 28, 2014] Exposure Draft Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans [Approved by the Board: May 28, 2014] PRELIMINARY VIEWS Preliminary Views Financial Reporting for Fiduciary Responsibilities [Approved by the Board: November 11, 2014] Preliminary Views Leases [Approved by the Board: November 11, 2014] Exposure Draft Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions [Approved by the Board: May 28, 2014] Exposure Draft Tax Abatement Disclosures [Approved by the Board: October 20, 2014] Accounting Standards Update No. 2014-13 Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity (a consensus of the FASB Emerging Issues Task Force) [August 2014] Accounting Standards Update No. 2014-14 Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force) [August 2014] Accounting Standards Update No. 2014-16 Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force) [November 2014] Accounting Standards Update No. 2014-17 Business Combinations (Topic 805): Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force) [November 2014] Accounting Standards Update No. 2014-18 Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination (a consensus of the Private Company Council) [December 2014] 10 Financial Accounting Foundation 2014 Annual Report 11 

8) Our collective VISION is to be a recognized leader in financial accounting and reporting. The key to our vision is that the FASB, the GASB, the FAF Trustees, and the FAF Management will be best-in-class in their respective roles. Our collective MISSION is to establish and improve financial accounting and reporting standards to provide useful information to investors and other users of financial information and educate stakeholders on how to most effectively understand and implement those standards. The FASB and the GASB set the highest-quality standards through a process that is robust, comprehensive, and inclusive. The FAF Trustees provide oversight and promote an independent and effective standardsetting process. THE BLUEPRINT FOR BUILDING A BETTER GAAP Strategic Plan THE BLUEPRINT FOR BUILDING A BETTER GAAP Strategic Plan The FAF, the FASB, and the GASB, working jointly, have developed this strategic plan— or blueprint—to articulate the long-range vision, mission, and strategic goals of each of the groups and the organization collectively. For the full FAF, FASB, and GASB strategic plan, visit www.accountingfoundation.org 12 Financial Accounting Foundation 2014 Annual Report 13 

9) Practicing and promoting continued excellence in standard setting 2 We will maintain and improve an effective and efficient standard-setting process. We will attract, develop and retain a highquality and diverse workforce. We will educate and explain to stakeholders the benefits of GAAP financial statements and the critical importance of an independent standardsetting process. 1 5 4 6 STRATEGIC GOAL Demonstrating a commitment to leadership in standard setting The FASB and the GASB will create the highest-quality accounting standards through a process that reflects our core values. That will result in their work being recognized, respected and emulated by others around the world. FASB and GASB standards will be recognized as a premier set of highquality accounting standards. We will lead by example. We will develop a technology strategy to meet the organization’s future needs and priorities. 7 8 10 9 1. (l. to r.) FASB Chairman Russ Golden, FAF President & CEO Terri Polley, & GASB Chairman Dave Vaudt; 2. FASB Member Larry Smith; 3. PCC Members Diane Rubin and Larry Weinstock; 4. (l. to r.) FASB Members Daryl Buck and Hal Schroeder; 5. FAF Secretary & Treasurer Ann Marie Petach; 6. FASB Member Marc Siegel 14 3 2 THE BLUEPRINT FOR BUILDING A BETTER GAAP Strategic Goals THE BLUEPRINT FOR BUILDING A BETTER GAAP Strategic Goals 1 STRATEGIC GOAL Financial Accounting Foundation 11 12 7. (l. to r.) FASB Member Tom Linsmeier and PCC Member Neville Grusd; 8. FAF Chairman Jeff Diermeier; 9. FAF Trustees Ann Spruill and John Veihmeyer; 10. FASB Assistant Director Peter Proestakes; 11. FASB Assistant Project Manager Aarika Friend; 12. FASB Project Manager Lauren Mottley and FASB Postgraduate Technical Assistant Jordan Isom 2014 Annual Report 15 

10) Building and maintaining trust with stakeholders Collectively and individually, the FASB, the GASB, and the FAF management team will build trusted relationships with and seek to maintain and develop support from a broad range of our stakeholders, who play a critically important role in helping to maintain the independence of the standard-setting process. 2 1 5 4 7 9 1. GASB Vice Chair Jan Sylvis; 2. GASB Senior Technical Advisor Ken Schermann; 3. GASB Member Marcia Taylor; 4. FAF Trustee Myra Drucker; 5. GASAC Vice Chair Jim Reardon; 6. FAF Trustee Dan Ebersole; 7. (l. to r.) Former GASB Vice Chair Martin Ives and GASB Member Michael Granof Financial Accounting Foundation Promoting public discourse on current and future financial reporting issues The FASB and the GASB, as well as the FAF organization as a whole, will establish themselves as influential thinkers—or “thought leaders”—to help shape and lead the discussion of important issues involving financial accounting and reporting and the financial accounting profession. 6 8 10 16 3 4 STRATEGIC GOAL THE BLUEPRINT FOR BUILDING A BETTER GAAP Strategic Goals THE BLUEPRINT FOR BUILDING A BETTER GAAP Strategic Goals 3 STRATEGIC GOAL 11 12 8. FAF Vice Chairman John Davidson; 9. GASB Chairman Dave Vaudt; 10. GASB Project Manager Paulina Haro-Camm; 11. GASB Executive Administrative Assistant Mary Milligan; 12. GASB Director Dave Bean 2014 Annual Report 17 

11) FAF FAF BOARD OF TRUSTEES OFFICERS Mr. Jeffrey J. Diermeier Chairman Mr. Carol Anthony (John) Davidson Vice Chairman Ms. Ann Marie Petach Secretary & Treasurer Mr. Jeffrey J. Diermeier Chairman FAF Board of Trustees Retired President & Chief Executive Officer CFA Institute Mr. Carol Anthony (John) Davidson Vice Chairman FAF Board of Trustees Retired Senior Vice President, Controller & Chief Accounting Officer Tyco International Ms. Teresa S. Polley President & Chief Executive Officer Ms. Ann Marie Petach Secretary & Treasurer FAF Board of Trustees Ms. Mary P. Crotty Chief Operating Officer Former Senior Managing Director BlackRock Solutions Mr. Jeffrey W. Rubin Vice President, General Counsel & Assistant Secretary TRUSTEE COMMITTEES Executive Jeffrey J. Diermeier, Chair Carol Anthony (John) Davidson Paul G. Camell W. Daniel Ebersole Michelle R. Seitz Terry D. Warfield Appointments & Evaluations Paul G. Camell, Chair John C. Dugan W. Daniel Ebersole W.M. (Mack) Lawhon Ann M. Spruill John B. Veihmeyer SENIOR STAFF Ms. Teresa S. Polley President & Chief Executive Officer Ms. Mary P. Crotty Chief Operating Officer Mr. Robert H. Kalina Vice President, Human Resources Mr. Gary H. Bruebaker* Chief Investment Officer Washington State Investment Board Mr. Paul G. Camell Retired Executive Vice President & Chief Accounting Officer CDM Smith Inc. Mr. Charles S. Cox Managing Director of Finance & Administration City of Farmers Branch, Texas Ms. Myra R. Drucker** Independent Director Grantham, Mayo, Van Otterloo & Co. Mr. John C. Dugan Partner Covington & Burling LLP Mr. W. Daniel Ebersole Retired State Treasurer State of Georgia Mr. Stephen R. Howe, Jr. Americas Managing Partner U.S. Firm Managing Partner Ernst & Young LLP Ms. Nancy K. Kopp* Treasurer State of Maryland Mr. W.M. (Mack) Lawhon Chairman Weaver Audit & Compliance Carol Anthony (John) Davidson, Chair Gary H. Bruebaker Charles S. Cox Myra R. Drucker Stephen R. Howe, Jr. Finance & Compensation Michelle R. Seitz, Chair Gary H. Bruebaker Charles S. Cox Nancy K. Kopp Ann Marie Petach Ann M. Spruill Standard-Setting Process Oversight W. Daniel Ebersole, Co-Chair Terry D. Warfield, Co-Chair Carol Anthony (John) Davidson Myra R. Drucker John C. Dugan Nancy K. Kopp Private Company Review W. M. (Mack) Lawhon, Chair Paul G. Camell Ann Marie Petach Michelle R. Seitz Terry D. Warfield Ms. Kimberley R. Petrone Chief of Staff Ms. Michelle R. Seitz Head of William Blair Investment Management William Blair & Company Mr. Jeffrey W. Rubin Vice President & General Counsel Mr. Robert W. Stewart Senior Vice President, Public Affairs Completed Service in 2014 Mr. John J. Brennan Chairman Emeritus Vanguard Ms. Ann M. Spruill* Partner (Retired) GMO & Co. LLC Mr. John B. Veihmeyer** Chairman KPMG International Chairman & Chief Executive Officer KPMG-US Mr. Terry D. Warfield PwC Professor in Accounting Chair, Department of Accounting & Information Systems University of Wisconsin School of Business Mr. Edward E. Nusbaum Chief Executive Officer Grant Thornton International Ms. Teri List-Stoll Former Executive Vice President & Chief Financial Officer Kraft Foods Mr. Luis M. Viceira George E. Bates Professor Harvard Business School *New member in 2014 **New members in 2015 18 Financial Accounting Foundation 2014 Annual Report 19 

12) FASB MEMBERS GASB MEMBERS PRIVATE COMPANY COUNCIL (PCC) PCC Chairman Mr. Billy M. Atkinson Past Chairman National Association of State Boards of Accountancy Russell G. Golden Chairman James L. Kroeker Vice Chairman David A. Vaudt Chairman Jan I. Sylvis Vice Chair FASB Liaison Mr. Daryl E. Buck Board Member Financial Accounting Standards Board Members Mr. George Beckwith Vice President & Chief Financial Officer National Gypsum Company Mr. Steven Brown Vice President U.S. Bank Mr. Jeffery C. Bryan Partner, Professional Standards Group Dixon Hughes Goodman LLP PCC Coordinator Mr. Mark Ellis Mr. Michael K. Cheng Chief Financial Officer Project Manager BabyGanics, PawGanics, Financial Accounting Standards Board PetLabs360 - KAS Direct LLC Mr. Neville Grusd President Merchant Financial Corporation Mr. Carleton Olmanson Managing Principal GMB Mezzanine Capital Ms. Diane Rubin Retired Partner Novogradac & Company LLP Mr. Lawrence E. Weinstock Vice President—Finance Mana Products, Inc. Mr. Thomas Groskopf Director & Owner Barnes, Dennig & Co., Ltd. Daryl E. Buck Thomas J. Linsmeier James E. Brown William W. Fish EMERGING ISSUES TASK FORCE (EITF) EITF Chair Ms. Susan M. Cosper Technical Director Financial Accounting Standards Board EITF Coordinator Ms. Jennifer Hillenmeyer Practice Fellow Financial Accounting Standards Board R. Harold Schroeder Marc A. Siegel Michael H. Granof David E. Sundstrom Members Mr. John M. Althoff Partner PricewaterhouseCoopers LLP Mr. Mark M. Bielstein Partner KPMG LLP Mr. James G. Campbell Vice President—Finance & Enterprise Services & Corporate Controller Intel Corporation Lawrence W. Smith Marcia L. Taylor Ms. Terri Z. Campbell Senior Managing Director Liberty Mutual Group Asset Management Inc. Mr. Alexander M. Corl CFO & Treasurer The Lee Company Mr. Jackson Day Partner Ernst & Young LLP Mr. Brett Dooley* Managing Director Corporate Accounting Policies Group JPMorgan Chase & Co. Mr. Carl Kampel Director in Charge of Professional Standards Ellin & Tucker, Chartered Mr. Mark LaMonte Vice President—Senior Credit Officer, Financial Institutions Group/Accounting Specialist Group Moody’s Investors Service Participating Observers Mr. Daniel Murdock Deputy Chief Accountant U.S. Securities & Exchange Commission Mr. James Dolinar Partner Crowe Horwath LLP Ms. Diane Rubin (PCC) Retired Partner Novogradac & Company LLP Completed service in 2014 Mr. Stuart H. Harden Partner Hemming Morse, LLP Mr. Lawrence J. Salva Senior Vice President, Chief Accounting Officer & Controller Comcast Corporation Mr. Ashwinpaul C. (Tony) Sondhi President A.C. Sondhi & Associates, LLC Mr. Robert Uhl Partner Deloitte & Touche LLP *New member in 2014 20 Financial Accounting Foundation 2014 Annual Report 21 

13) FASAC (Financial Accounting Standards Advisory Council) GASAC (Governmental Accounting Standards Advisory Council) FASAC Chairman Mr. Steven E. Buller Chairman Financial Accounting Standards Advisory Council GASAC Chairman Mr. Martin J. Benison Comptroller Commonwealth of Massachusetts GASAC Vice Chair Mr. James B. Reardon Commissioner of Finance & Management State of Vermont (Nominated by the National Association of State Auditors, Comptrollers & Treasurers) (Nominated by the National Governors Association) FASAC Executive Director Ms. Alicia A. Posta Executive Director FASB Advisory Groups Members Ms. Kay Booth Partner Trinity Private Equity Group LP Ms. Marsha L. Hunt Vice President—Corporate Controller Cummins Inc. Ms. Sharon A. Virag* Chief Accounting Officer The AES Corporation Mr. John Boulton Director, Accounting Research & Policy Fitch Ratings Mr. Adam G. Hurwich Portfolio Manager Ulysses Management LLC Mr. Jeffrey Wilks Director & EY Professor Brigham Young University Mr. Peter M. Carlson Executive Vice President & Chief Accounting Officer Met Life Mr. Paul Kepple Partner PricewaterhouseCoopers LLP Ms. Susan S. Coffey Senior Vice President, Public Practice & Global Alliances American Institute of CPAs Ms. Colleen K. Conrad Executive Vice President & Chief Operating Officer National Association of State Boards of Accountancy Mr. Neil A. Cotty Former Chief Accounting Officer Bank of America Corporation Mr. Anthony J. Dowd Chief of Staff Office of Paul A. Volcker Ms. Cynthia M. Fornelli Executive Director Center for Audit Quality Mr. Larry Gray Senior Partner—Professional Practice Group EisnerAmper LLP Ms. Linda L. Griggs Partner Morgan, Lewis & Bockius LLP Ms. Wendy M. Hambleton Partner, Director of SEC Services BDO USA, LLP Ms. Jan Hauser Chief Accounting Officer General Electric Company Mr. Michael (Mick) G. Homan Vice President, Finance & Accounting— Corporate Accounting The Procter & Gamble Company Dr. Patrick E. Hopkins Professor & SungKyunKwan Professor of Business Kelley School of Business Indiana University Mr. Xihao Hu Senior Vice President & Chief Accountant The Toronto-Dominion Bank Group Mr. Dan Mahoney Director of Research CFRA Ms. Maya McReynolds* Vice President of Finance & Chief Accounting Officer Dell Inc. Mr. Daniel S. Meader Principal Trinity Private Equity Group LP Ms. Catherine E. Mickle Chief Financial Officer American Cancer Society Mr. Sean C. Miller* Vice President—Technical Accounting Sony Pictures Entertainment Mr. Gregg L. Nelson* Vice President, Accounting Policy & Financial Reporting IBM Corporation Mr. Douglas R. Oare* Managing Director BlackRock, Inc. Mr. Thomas Omberg* National Leader, Financial Accounting & Reporting Services Deloitte & Touche LLP (Nominated by the National Association of State Budget Officers) Mr. Bernard Fischer* Director, Public Finance Group Fitch Ratings Mr. Gerard Lian Senior Analyst Invesco Fixed Income Mr. Joseph Stefko President & Chief Executive Officer Center for Governmental Research (Nominated by the Investment Company Institute) (Nominated by the Governmental Research Association) Mr. Lealan Miller Director, Government Services Eide Bailly, LLP Mr. Charles A. Tegen Associate Vice President for Finance Clemson University Completed service in 2014 (Bond Rater) (Nominated by the Association of Government Accountants) Ms. Carmen L. Bailey Partner in Charge—SEC & Practice Advisory KPMG LLP Ms. Barbara Flickinger Managing Director, Portfolio Services National Public Finance Guarantee Ms. Sandra Moorman Controller Sacramento Municipal Utility District Mr. Glen Whitley Tarrant County Judge Fort Worth, Texas (Nominated by the Association of Financial Guaranty Insurers) (Nominated by the American Public Power Association) (Nominated by the National Association of Counties) Ms. Amanda Noble Deputy City Auditor City of Atlanta, Georgia Mr. Robert A. Wylie* Executive Director/Administrator South Dakota Retirement System (Nominated by the Association of Local Government Auditors) (Nominated by the National Association of State Retirement Administrators) Mr. Prat Bhatt Senior Vice President & Corporate Controller, Chief Accounting Officer Cisco Systems Mr. Marc A. Delametter Vice President Accounting/Controller QuikTrip Corporation Ms. Cathy Engelbert Chief Executive Officer Deloitte & Touche LLP Ms. Gail L. Hanson Senior Vice President & Chief Financial Officer Aurora Health Care, Inc. Mr. Samuel J. Levenson Chief Executive Officer Arbor Advisory Group LLC Mr. Alan M. Meder Senior Vice President Duff & Phelps Investment Management Co. Ms. Sandra J. Peters, CFA Head, Policy Financial Reporting Group CFA Institute Mr. Wayne Gerhold* Principal Law Offices of Wayne D. Gerhold (Nominated by the National Association of Bond Lawyers) Mr. Brian Green* Partner Healthcare Audit & Reimbursement Services Seim Johnson (Nominated by the Healthcare Financial Management Association) Mr. Ronald Green Controller City of Houston, Texas (Nominated by the National League of Cities) (Nominated by the American Accounting Association) Ms. Tasha Repp Business Assurance Partner Tribal Services Group Moss Adams, LLP (Nominated by the National Conference of State Legislatures) Mr. James Lanzarotta Partner Moss Adams, LLP (Nominated by the American Institute of CPAs) *New members in 2014/2015 (Nominated by Insurance Industry Investors) Ms. Shirley D. Hughes* Director of Finance City of Boulder City, Nevada Mr. Stephen Klein Chief Fiscal Officer Vermont Legislative Joint Fiscal Office Mr. Lee Sotos* Senior Analyst Fidelity Worldwide Investment Mr. Robert M. Reardon Senior Investment Officer State Farm Insurance Company (Nominated by the U.S. Census Bureau) (Nominated by the U.S. Conference of Mayors) Ms. Sherry M. Smith* Board of Directors Deere & Company, Tuesday Morning Corporation Realogy Holdings Corporation (Nominated by the Association of School Business Officials International) Ms. Jacqueline L. Reck James E. Rooks and C. Ellis Rooks Distinguished Professor of Accounting School of Accountancy University of South Florida Mr. Perry James Chief Financial Officer City of Raleigh, North Carolina Mr. Stephen D. M. Schuetz* Deputy Vice Chair, Professional Practice EY Mr. Mark Pepera* Chief Financial Officer Westlake City School District, Ohio Ms. Demetria Hanna* Branch Chief Economic Statistical Methods Division U.S. Census Bureau (Nominated by the International City/County Management Association) Ms. Dianne H. Russell Hyde Boston Capital Mr. Ronald Temple Managing Director Lazard Asset Management Members Mr. Dominic Colafati Chief Budget Examiner, Expenditure/Debt Unit State of New York Mr. Richard Larkin* Senior Vice President, Director of Credit Analysis HJ Sims & Company, Inc. (Nominated by the Securities Industry and Financial Markets Association) (Nominated by the Native American Finance Officers Association) Mr. Robert W. Scott Director of Finance City of Brookfield, Wisconsin (Nominated by the Government Finance Officers Association) Mr. Daniel Smith Associate Professor of Public Budgeting & Financial Management Robert F. Wagner Graduate School of Public Service New York University (Nominated by the Association for Budgeting & Financial Management) (Nominated by the National Association of College & University Business Officers) Official Observer Mr. Robert Dacey Chief Accountant representing the Comptroller General of the United States Government Accountability Office Completed service in 2014 Ms. Lisa Blumerman Assistant Director, Decennial & 2020 Directorate U.S. Census Bureau Ms. Shirley Broz Retired Legislative Officer & Chief Financial Officer Rockwood School District, Eureka, Missouri Mr. Cline Comer Retired Partner CliftonLarsonAllen, LLP Ms. Neria Douglass Treasurer State of Maine Mr. Karl Jacob Senior Director, Public Finance Group Standard & Poor’s Financial Services, LLC Mr. John Overdorff Retired Shareholder, Public Finance Greenberg Traurig, LLP Mr. Robert Schultze Director Virginia Retirement System Mr. Steven T. Thompson Assistant Vice President Institute for Public Service University of Tennessee Mr. Gilbert L. Southwell III Vice President and Senior Municipal Analyst Wells Capital Management (Nominated by the National Federation of Municipal Analysts) *New members in 2014/2015 22 Financial Accounting Foundation 2014 Annual Report 23 

14) FASB ADVISORY GROUPS NOT-FOR-PROFIT ADVISORY COMMITTEE (NAC) SMALL BUSINESS ADVISORY COMMITTEE (SBAC) Ms. Deborah Adkins CFO Partner NPerspective, LLC Mr. Joseph A. Maffia, CPA Partner Janover LLC Mr. James Beck Managing Director & Chief Operating Officer Mayfield Fund Mr. Albert G. Pastino Executive Vice Chairman Revere Merchant Capital Mr. P. Glenn Bradley Partner Mountjoy Chilton Medley LLC Ms. Patricia P. Piteo Partner Cohen & Company Ltd. Mr. Richard E. Forrestel, Jr. Treasurer Cold Spring Construction Company, Inc. Mr. Leonard Steinberg Principal Steinberg Enterprises, LLC Mr. Richard H. Gesseck Richard H. Gesseck Consulting Completed service in 2014 Mr. Peter B. Stickler Senior Vice President & Chief Financial Officer Inland Bancorp Inc. Mr. Dennis R. Hein, CPA Partner Seim Johnson, LLP Mr. Robert Hoffman Chief Financial Officer Arena Pharmaceuticals Mr. W. Stephen Holmes General Partner InterWest Partners Mr. L. Kirk Billingsley, CPA Chief Financial Officer & Senior Vice President of Finance Pendleton Community Bank Mr. Gary M. Cademartori Managing Partner Prism Consulting, LLP Mr. Joseph A. Stieven Chief Executive Officer Stieven Capital Advisors, LP Members Mr. Frederick Cannon Director of Research, Chief Equity Strategist & Executive Vice President Keefe, Bruyette, & Woods, Inc., Research Division Mr. Wallace Enman Senior Accounting Analyst Moody’s Investors Service Mr. Gordon T. Edwards System Vice President of Finance PeaceHealth Mr. Scott M. Waite Executive Vice President, Strategic Planning & Special Projects Patelco Credit Union Mr. Kenneth C. Euwema Vice President, Controller United Way Worldwide Ms. Deborah Gillespie* Vice President, Finance & Administration & Secretary/Treasurer The Joyce Foundation Mr. Russell D. Wasson Director of Tax, Finance & Accounting Policy National Rural Electric Cooperative Association Ms. Candace Wright Audit Director Postlethwaite & Netterville Financial Accounting Foundation Mr. John A. Mattie Partner-in-Charge, Higher Education & Not-for-Profit Industry Practice PricewaterhouseCoopers LLP Mr. Bob Mims Controller/Director of Investments Ducks Unlimited, Inc. Mr. Norman C. Mosrie Partner Dixon Hughes Goodman, LLP Dr. Linda M. Parsons Associate Professor of Accounting Culverhouse School of Accountancy The University of Alabama Ms. Cynthia A. Pierce Partner-in-Charge, Higher Education & Not-for-Profit Industry Practice Crowe Horwath LLP Mr. Larry Probus Chief Financial Officer & Senior Vice President World Vision U.S. Ms. Laura Roos Partner Moss Adams LLP Mr. Roger Goodman Partner The Yuba Group LLC Ms. Jill Lehman* Head of Healthcare & TMT Research CFRA Participating Observers Mr. Christopher Cole Senior Technical Manager & Not-For-Profit Expert Panel Staff Liaison American Institute of CPAs Ms. Dena Markowitz Chief, Division of Investigations Pennsylvania Bureau of Corporations & Charitable Organizations (representing National Association of State Charity Officials) Completed service in 2014 Ms. Shari Berenbach President and Chief Executive Officer U.S. African Development Foundation Mr. Stephen Golding Vice President of Finance & Treasurer University of Pennsylvania Ms. Clara Miller President F.B. Heron Foundation Mr. Michael B. Tarnoff Executive Vice President & Chief Financial Officer Jewish Federation of Metropolitan Chicago Mr. John R. Kroll* Associate Vice President for Finance The University of Chicago Mr. Bennett M. Weiner Chief Operating Officer Better Business Bureau Wise Giving Alliance Mr. William G. Weldon Chief Financial Officer Roman Catholic Diocese of Charlotte, North Carolina Mr. Jonathan Nus Executive Director EY Mr. Matthew Schechter* Forensic Accountant Balyasny Asset Management Mr. Kevin W. Shea Chief Executive Officer Disciplined Alpha LLC Ms. Rita J. Spitz Principal William Blair & Company, LLC Mr. David Trainer Chief Executive Officer New Constructs *New members in 2014 24 Members Mr. Gregory B. Capin Partner Capin Crouse LLP Mr. Harvey P. Dale University Professor of Philanthropy and the Law Director, National Center on Philanthropy and the Law New York University School of Law Mr. Lawrence S. Wizel Senior Advisor 3SBio, Inc. INVESTOR ADVISORY COMMITTEE (IAC) Co-Chairs, IAC Ms. Dina M. Maher Examining Officer—Accounting Policy Financial Institution Supervision Group Federal Reserve Bank of New York Committee Chairman Mr. Jeffrey D. Mechanick Assistant Director — Nonpublic Entities Financial Accounting Standards Board *New members in 2015 2014 Annual Report 25 

15) FINANCIAL HIGHLIGHTS 26 Financial Accounting Foundation MANAGEMENT’S DISCUSSION AND ANALYSIS 2014 Summary The mission of the Financial Accounting Foundation (FAF) and its standard-setting Boards, the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB), is to establish and improve standards of financial accounting and reporting for public and private companies, not-for-profit organizations, and state and local governments. Collectively, these standards are known as Generally Accepted Accounting Principles (GAAP). Financial accounting and reporting standards help foster and protect investor confidence, facilitate the efficient operation of capital markets, and enable citizens to assess the stewardship of public resources by their state and local governments. The FAF, the FASB, and the GASB are committed to the development of high-quality financial accounting and reporting standards through an independent and open process that results in useful financial information, considers all stakeholder views, and ensures public accountability. The FAF is responsible for the oversight, administration, and finances of the FASB and the GASB, and their respective advisory councils, the Financial Accounting Standards Advisory Council (FASAC), and the Governmental Accounting Standards Advisory Council (GASAC). The FAF obtains its funding from three sources: • Accounting support fees that finance FASB operating and capital expenses pursuant to Section 109 of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act); 27 • Accounting support fees that finance GASB operating and capital expenses pursuant to Section 978 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act); and Statements of Activities 32 • Sales and licensing of copyrighted FASB and GASB materials. Statements of Financial Position 33 The FAF’s net assets decreased by $9.7 million in 2014, primarily resulting from the following: Statements of Cash Flows 34 Notes to Financial Statements 35 Management’s Report on Financial Responsibility and Internal Controls 43 Independent Auditor’s Report 44 Management’s Discussion and Analysis • The nonoperating decrease of $5.4 million for pension-related changes was due to increased benefit obligations under the FAF’s postretirement health coverage plan (Postretirement Plan) and the Employees’ Pension Plan (due to changes in assumptions for mortality rates and discount rates). The FAF’s expenses include program expenses, which are those directly related to its sole program of standard setting, and support expenses, which are those related to the general administration and operation of standard-setting activities. Program and support expenses increased by $3.2 million, or approximately 7%, from 2013 to 2014. 2014 program expenses include a non-recurring contribution of $3.0 million to the International Financial Reporting Standards Foundation (IFRS Foundation). The contribution was made to support the efforts of the IFRS Foundation’s standardsetting body, the International Accounting Standards Board (IASB) to complete work on four joint accounting standards projects under way with the FASB. The 2014 program expenses related to the FAF’s primary mission of improving financial accounting and reporting standards. These efforts included promoting the improvement and increased comparability of international accounting standards, simplifying GAAP, and working with the Private Company Council (PCC) to improve the standard-setting process for private companies. Program activities also included the continued development of the GAAP Financial Reporting Taxonomy (Taxonomy) for eXtensible Business Reporting Language (XBRL) and the evaluation of the effectiveness of the standardsetting process for both the FASB and the GASB through the postimplementation review (PIR) process. Financial Results The FAF’s financial statements are presented in accordance with GAAP and reflect the specific reporting requirements of not-forprofit organizations. The following is a discussion of the highlights of the activities and financial position of the FAF as presented in the accompanying audited financial statements. • Total program and support expenses exceeded total net operating revenues by $5.3 million. Program and support expenses are funded by accounting support fees and by a portion of Reserve Funds, as described more fully below under the heading Statements of Financial Position Reserve Fund Investments. In 2014, the FAF was able to significantly reduce accounting support fees with $18.7 million of amounts made available from Reserve Fund balances. This funding from Reserve Funds (which are not operating revenues) resulted in the difference between net operating revenues and total program and support expenses. This difference was anticipated during preparation of the 2014 budget. 2014 Annual Report 27 

16) MANAGEMENT’S DISCUSSION AND ANALYSIS Statements of Activities The following charts display the sources of revenues and program and support expenses for 2014 and 2013: 2014 Sources of Revenue FASB Accounting Support Fees 55% GASB Accounting Support Fees 14% Net Subscriptions & Publications 31% 2013 Sources of Revenue FASB Accounting Support Fees 55% GASB Accounting Support Fees 16% Net Subscriptions & Publications 29% 2014 Expenses Program—Standard Setting 79% Support 21% 2013 Expenses Program—Standard Setting 79% Support 21% FASB Accounting Support Fees FASB accounting support fees are assessed upon issuers, as defined by the Sarbanes-Oxley Act, to fund the expenses and other cash requirements of the FASB’s standard-setting activities, as reflected in the FAF’s annual operating and capital budget—the FASB recoverable expenses. Equity issuers and investment company issuers are assessed a share of the accounting support fees based upon their relative average monthly market capitalization, subject to minimum capitalization thresholds. The FAF has retained the Public Company Accounting Oversight Board (PCAOB) as its agent for invoicing and 28 Financial Accounting Foundation collecting FASB accounting support fees. FASB accounting support fees were $24.0 million in 2014 and $25.5 million in 2013. The FAF paid the PCAOB approximately $209,000 per year for collection services in 2014 and 2013. The Office of Management and Budget (OMB) has determined that the FASB accounting support fee is subject to sequestration pursuant to the Budget Control Act of 2011. Sequestration amounts are based on the federal government’s fiscal year, which, for the 2014 sequestration, began on October 1, 2013, and ended on September 30, 2014. During 2014, the FAF sequestered approximately $1.7 million with respect to the FASB accounting support fee. In November 2014, the OMB notified the FAF that the 2014 sequestered funds were available for spending for the 2015 federal fiscal year, which began October 1, 2014. The FAF understands that the FASB accounting support fee for federal fiscal year 2015 will be subject to sequestration in a similar manner. GASB Accounting Support Fees Pursuant to the Dodd-Frank Act, in 2012, the SEC issued an order approving a proposed rule change to the by-laws of the Financial Industry Regulatory Authority (FINRA) to establish an accounting support fee to fund the annual budget of the GASB, including rules and procedures to provide for the equitable allocation, assessment, and collection of the GASB accounting support fee from FINRA members. FINRA collects the GASB accounting support fee quarterly from member firms that report trades to the Municipal Securities Rulemaking Board (MSRB). Each member firm’s assessment is based on the member firm’s portion of the total par value of municipal securities transactions reported by FINRA member firms to the MSRB during the previous quarter. GASB accounting support fees were $6.2 million in 2014 and $7.4 million in 2013. The decrease in GASB accounting support fees reflects an increase in the amount of Reserve Fund balances made available by the FAF to offset GASB expenses in 2014. The FAF paid FINRA $30,000 for collection services in 2014 and 2013. Subscriptions and Publications Subscriptions and publications revenues for FASB and GASB product offerings are presented in the statements of activities on a combined basis, net of direct costs of $4.2 million in 2014 and $4.4 million in 2013. Gross revenues for FASB and GASB product offerings are separately broken out in the charts to the right for 2014 and 2013. the availability of free materials on GARS Online, subscription plan revenue decreased by $78,000 and revenue from bound editions decreased by $128,000. Revenue from bound editions was further impacted by the decision to not publish the 2014–2015 GASB Comprehensive Implementation Guide due to the ongoing GASB GAAP Hierarchy project. FASB Subscriptions and Publications The FAF licenses the content of the FASB Codification to commercial publishers and others for inclusion in their proprietary, comprehensive, online research systems. The FASB Codification also is directly accessible through an online platform and can be viewed either through a free Basic View or as an annual paid subscription to the Professional View that provides advanced navigation and system functions. The FAF also sells a bound edition of the FASB Codification and provides The FASB Subscription, an annual paid service that includes the distribution of printed copies of FASB Accounting Standards Updates (ASUs) when issued. (dollars in thousands) FASB subscription and publication revenues totaled $16.0 million in 2014, consistent with 2013. License fees increased slightly from 2013 and represented 83% of the total subscription and publication revenues in 2014. In 2014, the number of subscribers to The FASB Subscription and the Professional View of the Codification fell slightly, resulting in a $170,000 decline in subscription plan revenues. Sales of the FASB Codification annual bound edition decreased by $149,000, reflecting a decrease in demand for the hard copy version of that work. FASB Subscriptions and Publications 2014 License Fees 83% $13,289 Subscription Plans 14% $2,295 Codification Bound Volumes 2% $363 Other Total 1% $68 100% $16,015 2013 License Fees 81% $12,921 Subscription Plans 15% $2,465 Codification Bound Volumes 3% $512 Other Total 1% $77 100% $15,975 GASB Subscriptions and Publications (dollars in thousands) 2014 License Fees GASB Subscriptions and Publications The FAF licenses GASB materials to commercial publishers and others for inclusion in their proprietary comprehensive online research systems. Beginning in March 2013, GASB materials are directly accessible online through the Governmental Accounting Research System (GARS). GARS Online can be viewed either through a free Basic View or as an annual paid subscription to the Professional View that provides advanced navigation and system functions. GASB materials also are available through various subscription plans sold directly by the FAF, including The GASB Subscription (consisting of final documents as issued), the GASB Board Packages, and the CD-ROM-based GARS. In addition, the FAF sells bound editions of the GASB Codification, GASB Original Pronouncements, and the GASB Comprehensive Implementation Guide, as well as hard copies of individual pronouncements, user guides, Research Reports, and other documents. GASB subscription and publication revenues totaled $1.8 million in 2014, a 5% decrease from the 2013 revenues of $1.9 million. License fees increased from 2013, and represented 61% of the total subscription and publication activity in 2014. Due principally to 61% $1,079 Subscription Plans 30% $548 Bound Editions 13% $139 Final Documents and Other 1% $23 Total 100% $1,807 2013 License Fees 51% $979 Subscription Plans 33% $626 Bound Editions 14% $267 Final Documents and Other 2% $39 Total 100% $1,911 2014 Annual Report 29 

17) MANAGEMENT’S DISCUSSION AND ANALYSIS Program Expenses The FAF’s program expenses totaled $38.9 million in 2014, an increase of $2.6 million (7%) compared to $36.3 million in 2013. The increase was primarily driven by the non-recurring $3.0 million contribution to the IFRS Foundation. This was offset somewhat by a decrease in employee benefit costs of $495,000 due to the lower periodic benefit costs for the Postretirement Plan (due to changes in the plan), and Employees’ Pension Plan and Supplemental Executive Retirement Plan (SERP) (both of which were frozen to benefit accruals as of December 31, 2013). Salaries and employee benefits comprise approximately 78% of the FAF’s program expenses. Other program expenses include domestic and international travel for the FASB and the GASB members and staff, costs for holding advisory group and other meetings, library subscriptions and other reference materials, and other miscellaneous expenses. Support Expenses The FAF’s support expenses totaled $10.4 million in 2014, an increase of $628,000 (6%) compared to $9.8 million in 2013. The overall increase was driven by an increase in professional fees related to the development of the FAF’s strategic plan, the engagement of an outside consultant to perform a comprehensive compensation review (done every three years), and oversight related costs for a firm to enhance and broaden the FAF’s Trustee search capabilities over the next several years. Pension-related changes not reflected in operating expenses Pension-related changes are nonoperating adjustments to record the change in the funded status of the FAF’s defined benefit plans (the Employees’ Pension Plan and the SERP) and the Postretirement Plan. Pension-related changes are determined by comparing the fair value of plan assets against the actuarially determined amount of benefit obligations. The FAF recorded a nonoperating decrease in net assets of $5.4 million for 2014 (compared to a $4.8 million nonoperating increase in 2013). The valuation of the benefit obligation is highly sensitive to changes in the discount rate. The decrease in the discount rate in 2014, after an increase in 2013, increased the benefit obligation for all the plans. In addition, the FAF revised its mortality rate assumptions, which significantly increased the estimated valuation of the liabilities. Class Action Settlement In 2013, the FAF received $2.5 million from the settlement of a class action suit related to losses associated with the FAF’s short-term investment accounts. The investment losses were incurred in 2007, due to a sharp decline in the net asset value of a historically stable short-term fixed income mutual fund, which was affected by the sub-prime mortgage crisis. The receipt is the final settlement payment; accordingly no similar amounts were received during 2014. Statements of Financial Position Reserve Fund Investments The FAF established the Reserve Fund: (1) to provide the FAF, the FASB, and the GASB with sufficient reserves to fund expenditures not funded by accounting support fees or subscription and publication revenues; (2) to fund the operations of the FAF, the FASB, and the GASB during any temporary or permanent funding transition periods; and (3) to fund unforeseen contingencies. If the projected year-end Reserve Fund balance, which is net of short-term investments, exceeds the year-end target Reserve Fund, the FAF has historically voluntarily contributed this amount to fund the FASB and the GASB recoverable expenses that otherwise would be funded by accounting support fees. Prior to 2014, the FAF’s policy was to maintain a target Reserve Fund balance equal to one year of budgeted gross expenses for the entire organization plus a working capital reserve equal to one quarter of net operating expenses for the entire organization. In 2014, the Trustees approved a change to the FAF’s cash management policy to cap the targeted year-end Reserve Fund at one year of budgeted operating expenses (eliminating the working capital reserve of one quarter of net operating expenses). This change is being phased in over a three-year period beginning in 2014. The change in policy reflects, among other things, improved working capital cash flow resulting from the quarterly billing of GASB accounting support fees. Accounting support fee assessments in 2014 and 2013 were offset by the amounts made available from Reserve Funds of $18.7 million and $16.9 million, respectively. These amounts have benefited from favorable variances in revenues and expenses between budget and actual that carry over from the prior year and other items that affect the balance of the Reserve Fund. For 2014, these other items included the effect of the change in the FAF’s cash management policy to reduce the required amount of the Targeted Reserve Fund and the $2.5 million received in 2013 pursuant to a class action settlement relating to the FAF’s 2007 investment losses. Reserve Fund investments are unrestricted assets of the FAF and totaled $67.6 million and $72.1 million as of December 31, 2014 and 2013, respectively. The Reserve Fund’s assets were invested in approximately equal proportions in a money market mutual fund and a short-term, high-credit quality, fixed income mutual fund. Accounting Support Fees, Subscriptions and Publications, and Other Receivables Receivables as of December 31, 2014 and 2013, primarily included $1.7 million and $2.1 million of GASB accounting support fees and $3.5 million and $2.9 million of license fees, respectively. The remaining balance primarily related to subscriptions and publications. 30 Financial Accounting Foundation Accrued Postretirement Health Care Costs The funded status of the Postretirement Plan amounted to a $1.6 million net liability in 2014, compared to a prepaid balance of $2.0 million in 2013. This $3.6 million change was primarily driven by an increase in the benefit obligation of $4.0 million resulting from a decrease in the discount rate and changes in the mortality assumptions. Accrued Pension Costs Accrued pension costs include the projected benefit obligations of the SERP of $1.9 million and the Employees’ Pension Plan liability of $3.2 million. The balance in 2013 included the SERP liability of $1.7 million and the Employees’ Pension Plan liability of $2.0 million. The SERP was terminated effective December 31, 2013. In accordance with the provisions of the plan, final payouts to vested participants occurred in March 2015. The increase of $1.6 million in the net liability of the Employees’ Pension Plan was primarily due to an increase of $5.2 million in the benefit obligation due to the impact of the discount rate and mortality assumptions, partially offset by a $4.0 million increase in the plan assets due to investment return and a $1.0 million contribution. Outlook for 2015 The FAF expects 2015 financial results to be affected by a number of strategic initiatives that align with the strategic plan approved by the FAF Board of Trustees in April of 2015. The strategic plan identified the following priorities: • Practicing and promoting continued excellence in standard setting • Demonstrating a commitment to leadership in standard setting • Building and maintaining trust with stakeholders • Promoting public discourse on current and future financial reporting issues. Some of the initiatives relating to these priorities may include: • Enhanced professional and leadership development initiatives for staff • Initiatives to attract and retain a quality, diverse workforce • More meetings with national standard setters and other international regulators and stakeholders • Development and implementation of a stakeholder relationship management plan and system • Enhanced communication and outreach to stakeholders • Initiatives related to thought leadership • Information Technology (IT) assessment to advance our technology solutions and IT capabilities. We expect that much of our work on these initiatives will be accomplished with existing resources; however some additional operating costs may be incurred in 2015. These include costs for a comprehensive assessment of our use of technology and identification of new processes and systems to meet the current and future technology needs of the FAF, the FASB, and the GASB. 2014 Annual Report 31 

18) STATEMENTS OF ACTIVITIES STATEMENTS OF FINANCIAL POSITION Years Ended December 31 (dollars in thousands) 2014 2013 As of December 31 (dollars in thousands) Net operating revenue: Current Assets: Accounting support fees (Note 2): Cash and cash equivalents $5,497 $5,114 2014 FASB $24,034 $25,527 Short-term investments (Note 4) GASB 6,159 2013 Accounting support fee, subscription and publication, and other 7,390 Total accounting support fees 30,193 32,917 receivables (net of allowance for doubtful accounts of $87 and $92) Subscriptions and publications (Note 3) 17,822 17,886 Prepaid expenses and all other current assets Less-Direct costs of subscriptions and publications (Note 3) Total current assets 4,168 4,433 Net subscriptions and publications 13,654 13,453 Contributions-FAF contributed services 192 110 Total net operating revenue 44,039 46,480 Salaries and wages 24,407 23,676 5,326 5,337 383 394 20,439 19,839 Noncurrent Assets: Reserve Fund investments (Note 4) 67,588 72,140 Assets held in trust (Note 5) Prepaid postretirement health care costs (Note 5) Program expenses: 9,233 8,994 Furniture, equipment, and leasehold improvements, net (Note 6) 2,853 2,391 - 1,993 2,311 2,718 Total noncurrent assets 72,752 79,242 Employee benefits (Note 5) 6,005 6,500 Occupancy and equipment expenses (Note 7) 1,340 1,363 Depreciation and amortization 515 652 Professional fees 1,453 1,610 Accounts payable and accrued expenses $1,484 Contribution to the IFRS Foundation 3,000 - Accrued payroll and related benefits 1,131 1,135 Other operating expenses 2,204 2,543 Unearned publication and other deferred revenues 6,578 6,492 Total program expenses 38,924 36,344 Total current liabilities 9,193 8,282 Total assets $93,191 $99,081 Current Liabilities: $655 Noncurrent Liabilities: Support expenses: Accrued pension costs (Note 5) 5,161 3,705 Salaries and wages 4,038 3,652 Accrued postretirement health care costs (Note 5) 1,589 Employee benefits (Note 5) 1,240 1,768 Accrued rent expense (Note 7) 2,352 2,728 Occupancy and equipment expenses (Note 7) 828 841 Other liabilities (Note 5) 794 559 Depreciation and amortization 231 148 Total noncurrent liabilities Professional fees 2,902 2,197 Other operating expenses 1,153 1,158 Total support expenses 10,392 9,764 - 9,896 6,992 Total liabilities 19,089 15,274 Net Assets—Unrestricted 74,102 83,807 Total liabilities and net assets $93,191 $99,081 Total program and support expenses 49,316 46,108 Net operating revenue (less) greater than expenses (5,277) 372 See accompanying notes to these financial statements. Short-term investment income (Note 4) 22 19 Supplemental Pension Plan investment income (loss) (Note 5) 229 (93) Reserve Fund investment income (Note 4) 686 425 Pension-related changes not reflected in operating expenses (Note 5) (5,365) 4,798 Class action settlement (Note 4) 2,539 - (Decrease) increase in net assets (9,705) 8,060 Net assets at beginning of year 83,807 75,747 Net assets at end of year $74,102 $83,807 See accompanying notes to these financial statements. 32 Financial Accounting Foundation 2014 Annual Report 33 

19) STATEMENTS OF CASH FLOWS NOTES TO FINANCIAL STATEMENTS Years ended December 31 (dollars in thousands) 2014 2013 Cash flows from operating activities: Cash received from subscriptions and publication sales $17,461 $17,910 Cash received from accounting support fees 30,651 33,938 Cash received from class action settlement Interest and dividend income received - 2,539 925 942 Cash paid to IFRS Foundation (3,000) Cash paid to vendors, employees and benefit plans - (49,178) (47,060) Net cash (used in) provided by operating activities (3,141) 8,269 Cash flows from investing activities: Proceeds from sales of Reserve Fund investments $6,238 $2,000 Purchases of Reserve Fund investments (1,809) (5,824) Proceeds from sales of short-term investments 8,000 6,000 Purchases of short-term investments (8,239) (6,311) Proceeds from sales of assets held in trust 3 126 Purchases of assets held in trust (330) (387) Purchases of furniture, equipment and leasehold improvements, net (339) (2,492) Net cash provided by (used in) investing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period 3,524 (6,888) 383 1,381 5,114 3,733 Cash and cash equivalents at end of period $5,497 $5,114 Reconciliation of (decrease) increase in net assets to net cash (used in) provided by operating activities: (Decrease) increase in net assets for the period $(9,705) $8,060 Adjustments to reconcile (decrease) increase in net assets to net cash (used in) provided by operating activities: Depreciation and amortization 746 Net realized and unrealized losses on Reserve Fund investments 123 399 Net realized and unrealized (gains) losses on assets held in trust (135) Provision for losses on accounts receivable 800 191 1 27 Decrease in accounting support fee, publication and subscription, and other receivables 10 935 Decrease (increase) in all prepaid costs 2,004 (2,022) Increase (decrease) in accounts payable, accrued expenses, pension and other benefit accruals 3,870 (508) Increase in other liabilities 235 288 Increase in unearned publication and other deferred revenues 86 83 (Decrease) increase in accrued rent expense (376) 16 Total adjustments 6,564 209 Net cash (used in) provided by operating activities $(3,141) $8,269 Supplemental Information Noncash items included in the Statement of Activities: Pension-related changes not reflected in operating expenses See accompanying notes to these financial statements. 34 Financial Accounting Foundation $(5,365) $4,798 1 Nature of Activities and Summary of Significant Accounting Policies Activities The Financial Accounting Foundation (FAF), incorporated in 1972, is an independent, private-sector, not-for-profit, non-stock corporation with responsibility for establishing financial accounting and reporting standards, through an independent and open process, and educating stakeholders about those standards. The FAF is responsible for the oversight, administration, finances, and selection of the members of: • The Financial Accounting Standards Board (FASB), which establishes standards of financial accounting and reporting for nongovernmental entities, and the Financial Accounting Standards Advisory Council (FASAC) • The Governmental Accounting Standards Board (GASB), which establishes standards of financial accounting and reporting for state and local governmental entities, and the Governmental Accounting Standards Advisory Council (GASAC). The FAF was incorporated under Delaware General Corporation Law to operate exclusively for charitable, educational, scientific, and literary purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code, as amended (Code). The FAF obtains its funding from accounting support fees pursuant to Section 109 of the Sarbanes-Oxley Act of 2002, as amended (Sarbanes-Oxley Act), in support of the FASB; accounting support fees pursuant to Section 978 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) in support of the GASB; and subscriptions and publications revenues. Summary of Significant Accounting Policies Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The statements of activities are based on the concept that standard-setting is the sole program of the FAF. These statements set forth separately, where appropriate, revenues, costs of sales, and certain program expenses of the FASB and the GASB (Standards Boards), in recognition of their distinct responsibilities as described in the FAF’s Certificate of Incorporation and By-Laws. Program expenses include salaries, benefits, and other direct operating expenses for the members and research staffs of the respective Standards Boards and Councils, as well as costs for the ongoing development of the U.S. GAAP Financial Reporting Taxonomy and the process for conducting post-implementation reviews of FASB and GASB standards. Program expenses also include costs for external relations, government affairs and communications activities, and for the library services related to the standard-setting activities of the FASB and the GASB. In addition, program expenses in 2014 include a non-recurring contribution to the International Financial Reporting Standards Foundation (IFRS Foundation) to support the efforts of the IFRS Foundation’s standard-setting body, the International Accounting Standards Board (IASB), to complete work on joint projects under way with the FASB. Additional services for accounting and finance, human resources, facilities management, technology and information systems, legal, and general administrative operating assistance have been reflected as support expenses in the accompanying statements of activities. All of the net assets of the FAF are classified as unrestricted because none are subject to any donor-imposed restrictions. Use of Estimates The preparation of financial statements requires management to formulate estimates and assumptions that may affect the reported amounts of assets and liabilities at the dates of the statements and revenues and expenses for the reporting periods. Significant estimates made by management include actuarially determined employee benefit liabilities and the fair value of investments. Actual results could differ from those estimates. Accounting Support Fees Accounting support fees are recognized as revenue in the year for which those accounting support fees have been assessed as prescribed by the Sarbanes-Oxley Act and Dodd-Frank Act. See Note 2 for further information regarding accounting support fees. Contributions The FAF reports all contributions as increases in unrestricted net assets. Many individuals contribute significant amounts of time to the activities of the FAF, the Standards Boards, and their Advisory Councils without compensation. These individuals include certain members of the FAF’s Board of Trustees and participants of the following groups: the FASAC and the GASAC, the Private Company Council, the FASB’s Emerging Issues Task Force, and various other FASB and GASB councils, committees, task forces, and working groups on technical projects. Many others participate in the Standards Boards’ processes by submitting comment letters, participating in public hearings and roundtable meetings, and taking part in field visits and field tests. Members of the Board of Trustees are eligible for compensation for their services, with each having the right to waive such compensation. The accompanying financial statements reflect the value of waived Trustee compensation, which meets the criteria for recognition as contributed services. The other services described above 2014 Annual Report 35 

20) NOTES TO FINANCIAL STATEMENTS are not included as contributions in the accompanying financial statements because they do not meet the recognition criteria. Subscription Plans and Electronic License Agreements Revenues from publication sources are recognized over the life of the applicable subscription service or license period, typically one year. Costs for the production of updates and for fulfillment are charged to expense as incurred. Cash and Cash Equivalents For financial statement purposes, the FAF considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The carrying value of these investments approximates fair value due to the nature of the investments and the maturity period. Investments The FAF’s investments are recorded at fair value, all of which are measured using Level 1 inputs, which are defined as quoted market prices in active markets for identical investments. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date. Net appreciation (depreciation) includes gains (losses) on investments bought and sold as well as held during the year. Concentration of Credit Risk Financial instruments that potentially are subject to concentrations of credit risk consist principally of cash and cash equivalents, short-term investments, and Reserve Fund investments. Shortterm investments and Reserve Fund investments are held in various money market and fixed income mutual funds with a single high-credit-quality financial institution. The FAF has not experienced, nor does it anticipate, any credit-risk-related losses in such accounts. Accounting Support Fees, Subscriptions and Publications, and Other Receivables Receivables are carried at the amount billed or accrued, net of an allowance for doubtful accounts. The allowance for doubtful accounts is estimated based on management’s review of historical experience and current economic conditions. Employee Benefit Plans The FAF sponsors a postretirement health care plan and two defined benefit pension plans. Information with respect to the funded positions of each of the FAF’s pension and other postretirement plans at December 31, 2014 and 2013 is set forth in Note 5. Furniture, Equipment, and Leasehold Improvements Furniture, equipment, and leasehold improvements are reported in the statements of financial position at cost, less accumulated depreciation and amortization determined using the straight-line method. Furniture and equipment are depreciated over their estimated useful lives, ranging from 3 to 10 years. Leasehold improvements are amortized over periods not extending beyond the termination dates of the leases for office space. Income Taxes The FAF is a tax-exempt organization under Section 501(c)(3) of the Code. Management has reviewed tax positions for open tax years and determined that a provision for uncertain tax positions is not required. The FAF is currently open to audit under the statute of limitations by the Internal Revenue Service and state taxing authorities for the years ended December 31, 2011 through 2013. Subsequent Events The FAF has evaluated subsequent events through April 24, 2015, the date through which the financial statements are available to be issued, and determined that no subsequent events have occurred that require adjustment to or disclosure in the financial statements. Recent Accounting Pronouncements In May 2014, the FASB issued new authoritative guidance on revenue from contracts with customers. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industryspecific guidance. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The FAF is currently assessing the impact that adopting this new accounting guidance will have on its financial statements and footnote disclosures. 2 Accounting Support Fees The Sarbanes-Oxley Act provides for funding of FASB’s recoverable expenses through accounting support fees assessed against and collected from issuers of securities, as those issuers are defined in the Sarbanes-Oxley Act. The FASB accounting support fees are reviewed by the Securities and Exchange Commission (SEC) each year. The Dodd-Frank Act provides for funding of GASB’s recoverable expenses through an SEC order instructing the Financial Industry Regulatory Authority (FINRA) to establish, assess, and collect accounting support fees from its members. The accounting support fees provide funding for recoverable expenses associated with FASB and GASB’s standard-setting activities as identified in the FAF’s operating and capital budget for each calendar year and reflect adjustments for noncash expenses and certain cash requirements not reflected in the statements of activities. Recoverable expenses do not include trustee and oversight expenses. The FAF’s budgeted recoverable expenses for each Standards Board are statutorily eligible for funding by accounting support fees. However, on a voluntary basis, the FAF has applied any Reserve Funds in excess of a formula-based target amount to reduce what the FAF would otherwise be entitled to collect in accounting support fees. The Office of Management and Budget (OMB) has determined that the FASB is subject to sequestration pursuant to the Budget Control Act of 2011. Sequestration amounts are determined on the federal government’s fiscal year, which, for the 2014 sequestration, began on October 1, 2013, and ended on September 30, 2014. During 2014, the FAF sequestered approximately $1.7 million with respect to the FASB accounting support fee. In November 2014, the OMB notified the FAF that the 2014 sequestered funds were available for spending for the 2015 federal fiscal year, which began October 1, 2014. The FAF understands that the FASB accounting support fee for federal fiscal year 2015 will be subject to sequestration in a similar manner. The FASB accounting support fees recognized and related expenses included in the statements of activities for the past two years are as follows (dollars in thousands): Years Ended December 31 FASB accounting support fees Financial Accounting Foundation $ 25,527 FASB program expenses: Salaries and wages 19,831 19,232 Employee benefits 4,888 5,183 Occupancy and equipment expenses 1,051 Depreciation and amortization 1,072 436 613 Professional fees 1,199 Contribution to the IFRS Foundation 3,000 - Other operating expenses Total FASB program expenses 1,382 1,751 2,107 32,156 29,589 FASB support expenses: Salaries and wages 3,302 Employee benefits 1,011 1,430 2,981 Occupancy and equipment expenses 660 669 Depreciation and amortization 185 119 1,345 890 Professional fees Other operating expenses Total FASB support expenses Total FASB program and support expenses FASB accounting support fees less than FASB program and support expenses 703 688 7,206 6,777 39,362 36,366 $ (15,328) $ (10,839) The GASB accounting support fees recognized and related expenses included in the statements of activities for the past two years are as follows (dollars in thousands): Years Ended December 31 GASB accounting support fees 2014 2013 $ 6,159 $ 7,390 GASB program expenses: Salaries and wages 4,576 4,444 Employee benefits 1,117 1,317 Occupancy and equipment expenses Depreciation and amortization Professional fees Other operating expenses Total GASB program expenses 289 291 79 39 254 228 453 436 6,768 6,755 GASB support expenses: Salaries and wages 736 Employee benefits 229 338 Occupancy and equipment expenses 168 Depreciation and amortization Professional fees Other operating expenses 671 172 46 29 347 221 214 176 Total GASB support expenses 1,740 1,607 Total GASB program and support expenses 8,508 8,362 $ (2,349) $ (972) GASB accounting support fees less than GASB program and support expenses 36 2014 2013 $ 24,034 2014 Annual Report 37 

21) NOTES TO FINANCIAL STATEMENTS The FASB and the GASB expenses include their allocable share of FAF program and support expenses. The FAF expenses are incurred for the common benefits of the FASB and the GASB. Any differences (deficit or excess) of the accounting support fees recognized as revenues over the amount of recoverable expenses for an applicable calendar year (to the extent that the deficit was not financed from Reserve Fund balances) would be applied to the calculation of accounting support fees in subsequent years. 3 Subscriptions and Publications Revenues and Costs Years Ended December 31 2014 2013 Short-term: Interest and dividends $ 22 $ 19 $ 24 Reserve Fund: Interest and dividends $ Net realized and unrealized losses Total Reserve Fund investment income 809 (123) (399) $ 686 $ 425 Changes in the Reserve Fund balance for the past two years are as follows (dollars in thousands): Years Ended December 31 Subscriptions and publications operating revenues and costs consist of the following (dollars in thousands): Years Ended December 31 Investment Income and Losses (dollars in thousands): 2014 Fund balance, beginning of year Transfers (to) from operations, net 2013 Investment income Fund balance, end of year Subscriptions and publications revenues: FASB publications $ 16,015 GASB publications 1,807 $ 1,865 (5,238) 3,000 686 425 $ 67,588 $ 72,140 $ 17,886 $ 1,823 2013 $ 68,715 1,911 $ 17,822 2014 $ 72,140 $ 15,975 Reserve Fund assets are unrestricted and are maintained within the investment policies and guidelines for the Fund established by the Finance and Compensation Committee of the Board of Trustees. Direct costs: FASB publications GASB publications FAF administrative support 81 188 2,264 2,380 $ 4,168 $ 4,433 Net subscriptions and publications revenues: FASB publications $ 14,192 $ 14,110 GASB publications 1,726 1,723 ( 2,264) ( 2,380) $ 13,654 $ 13,453 FAF administrative support 4 In 2013, the FAF received $2.5 million from the settlement of a class action suit related to losses associated with the FAF’s short-term investment accounts in 2007, which is included as a nonoperating increase in net assets in the 2013 statement of activities. 5 Employee Benefits Employee benefits expense consists principally of employer payroll taxes, health care benefits for active and retired employees, and pension costs. Pension Plans The FAF sponsors a contributory defined contribution plan (the Investments and Investment Employees’ Tax Sheltered Annuity Plan) and two defined benefit Income and Losses pension plans (the Employees’ Pension Plan and the Supplemental Investments Executive Retirement Plan (SERP), collectively the Defined Benefit The following table presents investments measured at fair value, all Plans). Employees do not contribute to the Defined Benefit Plans. of which are measured using Level 1 inputs (dollars in thousands): Effective January 1, 2008, the Defined Benefit Plans were closed At December 31 2014 2013 to all new hires, and benefit accruals for participating employees Short-term: ended as of December 31, 2013. Money market mutual fund $ 9,233 $ 8,994 Reserve Fund: Fixed income mutual fund Money market mutual fund $ 33,736 $ 36,325 33,852 35,815 $ 67,588 $ 72,140 The SERP was terminated effective December 31, 2013. In accordance with the provisions of the plan, final payouts to vested participants occurred in March 2015, after a mandatory deferral period. part of assets held in trust on the accompanying statements of financial position, and accordingly, are not included in the change in plan assets due to the nature of the assets. The SERP Grantor Trust assets experienced investment income of $229,000 in 2014, and investment losses of $93,000 in 2013. The investments include mutual funds with asset allocations of 100 percent in fixed income investments. The investments are all measured using Level 1 inputs, as defined by U.S. GAAP. The FAF maintains a 457(b) deferred compensation plan to provide the ability to make tax-deferred contributions to employees whose annual base compensation exceeds the maximum compensation limit for qualified plan contributions under Code §401(a)(17). Contributions are made into a rabbi trust maintained by the FAF for each participating employee and remain assets of the FAF until distributed to the participant upon termination of their employment. The plan assets and related liabilities of $768,700 and $532,700 as of December 31, 2014 and 2013, respectively, are included as assets held in trusts and other liabilities in the statements of financial position. Employee benefits expense arising from the defined contribution plan was $2,769,800 and $2,543,900 for 2014 and 2013, respectively. Employer contributions to the plan are based on the employee’s earnings level, with incremental increases based on the employee’s age, and vest after 1.5 years of service. Postretirement Health Coverage Plan The FAF sponsors a postretirement health coverage plan (Postretirement Plan) for all eligible retirees of the FAF with benefits varying based on retirement age and years of service. Effective January 1, 2014, the Postretirement Plan was amended to limit the level of benefits that will be paid to current employees and new hires. Retiree benefits will be limited for new hires after December 31, 2013, to the lesser of (1) the year-end 2013 calculated benefit amounts or (2) the calculated benefits offered during the year of retirement. Employees hired before January 1, 2014, are eligible for retiree benefits limited to the lesser of (1) health plan costs at 2013 calculated benefit amounts subject to a cap on potential annual increases not to exceed five percent (5%) per year or (2) calculated benefits offered during the year of retirement. Benefits for participants who were retired as of December 31, 2013, will not be affected by these amendments. The amendments resulted in a $1,036,000 reduction in the accumulated pension benefit obligation for the year ended December 31, 2013, which is being amortized over the average period of full eligibility for active participants. The FAF funds retiree health care benefits through a Grantor Trust. Assumptions The principal actuarial assumptions used to determine periodic benefit costs and year-end benefit obligations for the Defined Benefit Plans and Postretirement Plan are as follows: Employees’ Pension Plan 2014 2013 SERP 2014 2013 Postretirement Plan 2014 2013 Net periodic expense assumptions: Discount rate 4.60% 3.75% 0.50% 3.75% 4.75% 3.75% Rate of compensation increase N/A 3.50% N/A 3.50% N/A N/A Expected return on plan assets 5.40% 4.50% N/A N/A 6.60% 6.25% Benefit obligation assumptions: Discount rate Rate of compensation increase Due to the changes in the Postretirement Plan, benefit amounts for active participants as of December 31, 2013, have been assumed to increase 5.0% per year after 2013. No increases are assumed for active participants hired after 2013. The expected long-term rates of return on plan assets assumptions were based upon a review of historical returns, and expectations and capabilities of future market performance. 3.75% 4.60% N/A N/A 0.45% 0.50% N/A N/A 3.85% 4.75% N/A N/A The rate of compensation increase assumption no longer applies to the Defined Benefit Plans in 2014 due to the freezing of accruals in both plans as of December 31, 2013. In addition to assumptions in the above table, assumed mortality is also a key assumption in determining benefit obligations. At December 31, 2014, the assumed mortality rates were updated to reflect life expectancy improvements. The FAF has established a Grantor Trust pursuant to Section 457(f) of the Code for the benefit of its SERP. The FAF made no employer contributions to the Trust during the years ended December 31, 2014 and 2013. Grantor Trust assets of $2,083,900 and $1,858,000 as of December 31, 2014 and 2013, respectively, are included as 38 Financial Accounting Foundation 2014 Annual Report 39 

22) NOTES TO FINANCIAL STATEMENTS The following table sets forth the amounts recognized in the statements of financial position, the change in benefit obligations, the change in plan assets, funded status, and other information for the Defined Benefit Plans and Postretirement Plan (dollars in thousands): Defined Benefit Plans Postretirement Plan 2014 2013 2014 2013 Change in benefit obligations: Benefit obligation, beginning of year $ 25,050 $ 26,859 $ 11,713 $ 14,109 Service cost – 600 530 679 Interest cost 1,056 987 550 524 Actuarial losses (gains) 5,301 (2,467) 3,231 (2,297) Benefits paid (947) (929) (407) Retiree contributions – – 93 – – 16 13 Plan change – – was 100 percent in fixed income investments as of December 31, 2014, and is based upon the funded status of the plan, valuation of the liability, and the returns and risks relative to the liability. The asset allocation policy for the Postretirement Plan reflects the target allocation of 50 percent in equity investments (which includes 50 percent of the equity holdings for international stocks) and 50 percent in fixed income investments. The plan assets of the Employees’ Pension Plan and Postretirement Plan were invested in mutual funds at December 31, 2014 and 2013, the majority of which were indexed. The following table presents the fair value of major categories of plan assets, all of which are measured using Level 1 inputs, as defined (dollars in thousands): 128 Medicare Part D reimbursement Plan Assets Investment objectives and policies for the plan assets are established by the Finance and Compensation Committee (Committee) of the FAF. The overall long-term investment strategy for the Employees’ Pension Plan and Postretirement Plan is to generate returns sufficient to meet obligations of beneficiaries at acceptable levels of risk by maintaining a high standard of portfolio quality and achieving proper diversification. The Committee has retained a professional investment manager for the assets of the employee benefit plans that maintains discretion over investment decisions, within asset allocation ranges recommended by the Committee. Benefit obligation, end of year $ 30,460 Change in plan assets: Fair value of plan assets, beginning of year – (1,036) $ 15,716 $ 11,713 $ 13,706 – – (2,125) – 93 Benefits paid Fair value of plan assets, end of year 25,299 21,345 14,127 (944) (799) $ (3,705) Amounts recognized in financial statements: Noncurrent liabilities $ – 745 $ 2,527 Net prior service credit – Amortization of net actuarial losses (454) Amortization of net prior service costs (credits) 166 $ 2,239 Amounts not yet recognized as components of net periodic benefit costs: Net actuarial losses – 25,221 Cash held by investment manager 128 Total $ 3,735 $ 3,910 – 3,257 3,696 21,269 7,135 6,100 78 76 – – $ 25,299 $ 21,345 $ 14,127 $ 13,706 (417) (407) 13,706 $ (1,589) $ 1,993 $ Descriptions of Funds (a)  These funds invest in small-, mid-, and large-cap companies from diversified industries using a blend of growth and value strategies and index sampling. (b)  This fund is passively managed and seeks to track the performance of international composite indexes. It has broad exposure across developed and emerging non-U.S. equity markets. Approximately 50% is invested in European companies. (c)  These funds are passively managed using index sampling and consist of short-term, intermediate-term, long-term, and extended duration mutual funds. $ 1,993 $ – $ (3,705) $ 727 – $ (1,589) $ 3,381 – (1,067) 166 $ (174) – $ 1,993 $ (2,865) – (1,036) (349) $ 10,536 $ 8,464 (460) (627) $ 7,837 $ 6,647 Defined Benefit Plans Service cost Interest cost Expected return on plan assets (38) $ (4,624) Postretirement Plan 2014 2013 2014 2013 94 $ 3,126 Net Periodic Benefit Expense The components of net periodic benefit expense for the past two years are as follows (dollars in thousands): (685) $ – $ 1,056 600 $ 530 $ 679 987 550 524 (1,124) (1,071) $ 3,615 (884) (979) $ 5,763 (895) (789) Amortization of prior period actuarial losses $ 10,076 Net prior service credits International equity index fund (b) – Amounts recognized as pension–related changes not reflected as operating expenses: Net actuarial losses (gains) $ – $ – 1,357 (5,161) (3,705) (1,589) $ (5,161) 2014 2013 2014 2013 Fixed income funds (c) – Postretirement Plan Mutual funds (all Level 1): 3,898 Noncurrent assets Fair Value of Plan Assets at December 31 $ 12,628 Actual investment income (losses) on plan assets $ (5,161) Employees’ Pension Plan U.S. equity funds (a) $ 24,269 1,000 Retiree contributions Funded status at end of year The asset allocation for the Employees’ Pension Plan, which is consistent with the target allocation established by the Committee, $ 21,345 Employer contributions, net of Medicare Part D reimbursements of $16 and $13 in 2014 and 2013 $ 25,050 (417) 454 1,067 349 685 Amortization of prior service costs (credits) (166) (166) (94) 38 Net periodic benefit expense $ 220 $ 1,417 $ 440 $ 1,137 $ 2,636 Amounts expected to be recognized during the year ended December 31, 2015 and 2014: Amortization of net actuarial losses Amortization of net prior service credits 40 Financial Accounting Foundation $ 399 (145) $ 254 $ 454 $ 637 (166) $ 288 $ (95) $ 542 $ 349 (95) 254 2014 Annual Report 41 

23) NOTES TO FINANCIAL STATEMENTS The following benefit payments, which reflect expected future service, are projected to be paid under the FAF’s benefit plans, including the amounts of Medicare Part D subsidies for the Postretirement Plan (dollars in thousands): Postretirement Plan Year Defined Ended Benefit Medicare December 31 Plans Gross Part D Net 2015 $ 3,822 $ 311 $ 2016 1,742 374 2017 1,577 2018 MANAGEMENT’S REPORT ON FINANCIAL RESPONSIBILITY AND INTERNAL CONTROLS 7 Lease Commitments The FAF has an operating lease on the Norwalk, Connecticut office space until September 30, 2022. Total rental expense for office space and equipment amounted to $1,976,400 and $2,040,000 in 2014 and 2013, respectively. Accrued rent expense is attributable to escalating minimum lease payments, initial rent abatement, and leasehold improvement allowances. The rent expense liability is being amortized over the remaining term of the applicable operating lease. 9 $ 302 10 364 420 11 409 Future minimum payments under the operating lease for office space, including the FAF’s current share of real estate taxes and other operating costs, are as follows (dollars in thousands): 1,587 464 12 452 Year Ended December 31 2019 1,604 514 13 501 2020-2024 8,468 3 ,645 93 3,552 The FAF expects to contribute $1,000,000 to the Employees’ Pension Plan during 2015. $ 7,958 $ 7,643 13,111 12,772 Accumulated depreciation and amortization (10,800) (10,054) Financial Accounting Foundation 2017 1,681 2018 Total minimum lease payments Leasehold improvements 5,153 5,129 42 2016 2,237 1,780 Thereafter 6,547 At December 31 (dollars in thousands) 2014 2013 $ 2,237 2019 2,369 6 Furniture, Equipment, and Leasehold Improvements Furniture and equipment 2015 $ 2,311 $ 2,718 $ 16,851 Management of the Financial Accounting Foundation is responsible for the preparation of the accompanying financial statements, and for the fairness and accuracy of the financial information included in this annual report. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Management is also responsible for establishing and maintaining an adequate internal control structure and adequate procedures for financial reporting. The FAF maintains a system of internal controls designed to ensure the integrity, objectivity, and overall effectiveness of the accounting and financial reporting process. The Board of Trustees of the FAF, through its Audit and Compliance Committee, oversees: (1) the organization’s financial and accounting policies and reports; (2) the organization’s internal control over financial reporting; (3) the system of accounting and related internal controls and the competence of persons performing key functions within that system; and (4) the scope and results of independent audits, including any comments received from auditors on the adequacy of internal controls and quality of financial reporting. The FAF’s auditors render an objective, independent opinion annually on the organization’s financial statements, and they have free and direct access to discuss matters with the Audit and Compliance Committee, with and without the presence or knowledge of management. The auditors are engaged by the Board of Trustees and report directly to the Audit and Compliance Committee. The FAF’s Audit and Compliance Committee has chosen to follow certain requirements issued for public companies as promulgated by the New York Stock Exchange, the Securities and Exchange Commission, and other securities regulators, by developing and maintaining a charter governing its operations. Although the FAF is not a public company, the Audit and Compliance Committee has concluded that the organization should voluntarily comply with public company recommendations and regulations where appropriate. The Audit and Compliance Committee charter identifies the key objectives, functions, operating practices, membership requirements, and duties and responsibilities of the Committee. The responsibilities include regularly reviewing the charter to identify areas in need of enhancement, expansion, and/ or clarification. The voluntary compliance effort has continued with respect to the audit committee and internal control provisions of the Sarbanes-Oxley Act of 2002, and the related Securities and Exchange Commission and Public Company Accounting Oversight Board guidance. The FAF has completed its compliance plan with respect to internal control over financial reporting (as addressed for public companies by Section 404 of the Sarbanes-Oxley Act). The Audit and Compliance Committee’s charter is available through the office of the FAF’s President and Chief Executive Officer. Management of the FAF is responsible for establishing and maintaining adequate internal control over financial reporting. The FAF’s internal controls are designed to provide reasonable assurance as to the reliability of the entity’s financial statements for external purposes. Internal control over financial reporting does have inherent limitations and may not prevent or detect all misstatements. Therefore, even those systems determined to be effective can provide only reasonable, and not absolute, assurance with respect to financial statement preparation and presentation. Also, due to changing conditions, the effectiveness of internal control over financial reporting may vary over time, and certain controls may prove to be inadequate. Under the supervision and with the participation of other members of management, we have evaluated the effectiveness of the FAF’s internal control over financial reporting as of December 31, 2014. In making this assessment, we have utilized the internal control framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control–Integrated Framework (2013). We have concluded that, based upon our evaluation, the FAF’s internal control over financial reporting was effective as of December 31, 2014. The Trustees also have adopted, and regularly monitor, personnel policies designed to ensure that employees of the FAF are free of conflicts of interest. Finally, to facilitate open communication, the Trustees, through the Audit and Compliance Committee, have adopted, and regularly monitor, an ombuds policy designed to provide an independent resource for reporting integrity or compliance concerns. Jeffrey J. Diermeier Chairman Financial Accounting Foundation Board of Trustees Teresa S. Polley President & Chief Executive Officer Financial Accounting Foundation 2014 Annual Report 43 

24) INDEPENDENT AUDITOR’S REPORT TO THE BOARD OF TRUSTEES FINANCIAL ACCOUNTING FOUNDATION NORWALK, CONNECTICUT Report on the Financial Statements We have audited the accompanying financial statements of the Financial Accounting Foundation which comprise the statements of financial position as of December 31, 2014 and 2013, and the related statements of activities and cash flows for the years then ended and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Financial Accounting Foundation as of December 31, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. McGladrey LLP New Haven, Connecticut April 24, 2015 44 Financial Accounting Foundation IN MEMORIAM JODI P. DOTTORI On May 10, 2014, the FAF, the FASB, and the GASB lost our dear friend and colleague, Jodi Dottori, following a courageous fight with cancer. Beyond his extraordinary contributions to the work of the organizations, and his commitment to excellence in everything he did, Jodi’s warmth, grace, friendliness, humor and generosity of spirit profoundly affected everyone who knew and worked with him. Mr. Dottori had served as vice president and assistant secretary of the FAF since January 2009. He was appointed to the role of chief of staff of the Foundation in April 2010, after serving four years as its general counsel. 

25)  Financial Accounting Foundation 401 Merritt 7 P.O. Box 5116 Norwalk, CT 06856-5116 www.accountingfoundation.org  Financial Accounting Standards Board www.fasb.org  Governmental Accounting Standards Board www.gasb.org Inquiries Saira Zafar 203.956.5252 szafar@f-a-f.org Subscription Information 800-748-0659 fasbpubs@fasb.org (for FASB publications) gasbpubs@gasb.org (for GASB publications)