ACC 497 Week 2 Team Assignment Case Study Assignment - SAMPLE
ACC 497 Week 2 Team Assignment Case Study Assignment - SAMPLE
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Date Created: 11/19/15
Case Study Case Study Ace 497 Case 13 Politicalization of Accounting Standards Case Study 2 a The original formation of accounting organizations came from the need to be more organized with standards that would be followed by all companies with the idea of protecting the business and the stockholder From this need the Committee on Accounting Procedure CAP was formed This committee had the authority to issue pronouncements on accounting procedures with the idea of establishing generally accepted practices This committee became more active after the release of the Securities and Exchange Commission s SEC ARS No 4 which stated that reports filed with the SEC must be in accordance with those practices that have substantial authoritative support Schroeder Clark amp Cathey 2011 p 6 Due to the con icts of the CAP committee such as the members were part time and the work seemed to be inconsistent the American Institute of Certified Public Accountants AICPA formed the Accounting Principles Board The objectives of this board are to issue pronouncements pertaining to generally accepted accounting principles GAAP Following the APB the Financial Accounting Standards Board FASB was formed in response to the criticism of the development of GAAP by the APB FASB was expected to be more effective in the issuing of principles due to its smaller size and full independence from the SEC and the government It is natural that the work of committees will be in uenced by other committees due to the fact that they all have the same goals develop generally accepted accounting principles that all businesses will follow If a committee does not appear to be doing what they should then the need to reorganize or establish a completely new committee is apparent So the creation of and demise of the first two in my opinion does create an indication of politicalization of accounting standard setting Case Study 3 b The arguments that can be raised to support the politicalization of accounting standard setting can be summed up into one the committees working together compromising in setting standards would result in more cohesive standards and more understandability of those standards c The arguments against politicalization of accounting standards can also be summed up into one independence The compromising of setting standards by committees as the result of the in uence of other boards will result in less independence of each committee Committees having independence results in their work being more dependable Case 14 Generally Accepted Accounting Principles in Ch 1 Investopedia 2012 states that Accounting principles are the rules and guidelines that companies must follow when reporting financial data and explains that because accounting principles differ across the world investors should be aware of these differences and account for them when comparing companies in different countries para 12 The primary goal for the accounting principles is to provide support and resources for accountants and financial professionals to conduct an assessment on a companies financial data Although there are differences in accounting principles between countries it would not affect the market the investors should be careful in making decisions on investment We may see the accounting principles term in audit report and it only refers to the advice from the accounting counsel such as AICPA The common set of accounting principles is GAAP To remain listed on many major stock exchanges in the US companies must file regular financial statements reported according to GAAP GAAP is a combination of authoritative standards set by policy boards and simply the commonly accepted ways of recording and reporting accounting information Case Study 4 The CPA or auditors will collect the authoritative evidence and determine whether it is sufficient to apply on GAAP Because of the constant changes of GAAP and lack of uptodate level diversity in accounting practice will always exist among independent entities It has been discussed that there are too many accounting standards issued on businesses by the FASB and AICPA Therefore it may cause difficulties for small businesses because they do not have the resources to research the pronouncements The Emerging Issues Task Force was EITF advanced in order to support businesses in better understanding accounting issues not clearly stated in the pronouncements provided by the FASB The EITF also advises the FASB staff on whether a FASB issue needs to be acted on and helps with new types of securities new products and services and variations in accounting for existing types of transactions Many accountants have argued for disclosure standard differentials as a possible solution about the overload problems of those standards Case 22 The Theoretical Foundation of Accounting Principles a Discuss the goals and objective of i The Conceptual Framework ii The Emerging Issues Task Force The Conceptual Framework Project is a project worked on by both the International Accounting Standards Board IASB and FASB with the intentions of creating an improved common conceptual framework The IASB 2007 reports that the goals of the project are developing standards that are principlesbased internally consistent internationally converged and that lead to financial reporting that provides the information needed for investment credit and similar decisions para 1 Case Study 5 The objective of the Conceptual Framework Project is to build on the existing framework that IASB and FASB have in place to consider new developments since the project began and ultimately to create a consistent and complete framework The EITF was created in 1984 by FASB to meet two objectives to assist in identifying issues and problems that might require action and expanding the scope of the FASB Technical Bulletins in an effort to offer quicker guidance on a wider variety of issues Schroeder R Clark M amp Cathey J 2011 p 13 The task force was created to address issues not addressed in current accounting pronouncements that are in need of immediate review and resolution The task force was also created to address the opposite of the prior reason mentioned called the standards overload problem Schroeder Clark and Cathey 2011 state that the goal of the ETIF is to provide timely guidance on new issues while limiting the number of issues whose resolutions require formal pronouncements by the FASB p 13 b Discuss the standards overload problem The standards overload problem is an issue that can be defined as too many accounting standards It is one of the issues that the ETIF was created to deal with and is a term used by members in the business community to criticize groups such as the AICPA SEC and FASB The standards overload problem focuses primarily on small businesses who find the volume of standards to be burdensome to them because of their lack of resources to research and implement all of the ongoing pronouncements Schroeder Clark and Cathey 2011 explain that those who contend that there is a standards overload problem base their arguments on two allegations 1 not all GAAP requirements are relevant to small business financial reporting needs and 2 even Case Study when GAAP requirements are relevant they frequently violate the pervasive costbenefit constraint p14 References Investopedia 2012 Accounting principles Retrieved from httpWWWinvestopediacomtermsaaccountingprinciplesaspaxzz1yOrUD6Cc Investopedia 2012 GAAP Retrieved from httpWWWinvestopediacomtermsggaapaspaxzz1yOrUD6Cc IASB 2007 Conceptual Framework Project Retrieved from http WWWifrsorgNRrdonlyresEC02CB 15 77E04A6DBDCB CFSDFEC195E300702sob04pdf Schroeder RG Clark MW amp Cathey J M 2011 Financial accounting theory and analysis Text and cases 10th ed Hoboken NJ Wiley Case Study
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