...The standard setting process The recent, high profile accounting scandals shook the foundations of the capital markets. Financial reporting furnishes investors and other stakeholders with reliable and relevant information. In the short term unethical financial reporting resulted in loss of billion dollars, but in the long term the impact was even more severe: loss of confidence in financial reporting as reliable source of information. The following reforms aimed to restore investor confidence in financial reporting and accounting profession. They reinforced the importance of ethics in financial reporting and provided recommendation on accounting standard setting process. The following paper provides a brief discussion on standard setting organizations and process and the authoritative sources of accounting. This study also covers the objectives of financial reporting and its role in today’s economy and concludes that ethics will remain cornerstone of the accounting profession. Table of Contents Abstract 2 The standard setting process 4 Standard setting process and authoritative sources of accounting information 5 Objectives of financial reporting 6 Ethics’ role in financial reporting 6 Conclusion 7 References 10 The standard setting process The dawn of the new century brought an economic downturn. The tragic events of 9/11 and the burst of the dot.com bubble accelerated the general decline. Investors kept corporate managements under constant pressure...
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...Accounting 381 Project 2: Three Little Pigs Case Study (15 points) Due: Thursday, March 11 (at beginning of class). Also, please be prepared to discuss the case and your group’s solution in class on this date. Groups: Please work in groups of 3-5 students (submit 1 discussion per group). You may select your own groups. Please contact me if you are having difficulty finding a group. Required: First, prepare a discussion outlining the alternatives for determining whether inventory impairment exists in the Three Little Pigs case. Second, if the company determines that an impairment of inventory is necessary, prepare a discussion outlining the alternatives for determining whether the impairment should be recognized in an interim period. Relying on the applicable guidance, discuss the appropriate way for Three Little Pigs to evaluate and recognize inventory impairment. Your discussion should include cites to the applicable guidance and how it applies to Three Little Pigs’ transactions. Your discussion should be no more than 3 pages in length. Applicable Professional Pronouncements: • ASC 270, Interim Reporting (Accounting Principles Board Opinion 28, Interim Financial Reporting) • ASC 330, Inventory (Accounting Research Bulletin 43, Restatement and Revision of Accounting Research Bulletins (ARB 43) as amended by FASB Statement No. 151, Inventory Cost. and Emerging Issues Task Force 86-13, Recognition of Inventory Declines at Interim Reporting Dates...
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...ACCT 5321.001 Dr. Martin Taylor FASB/IASB Exposure Draft on Leases The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) published comment a revised Exposure Draft on Leases on May 16th, 2013 and closed on September 13th, 2013. Based on this exposure, two boards claimed that the existing financial reporting of leasing activities fails to meet the needs of users of financial statements. While the existing accounting principles require to record the leased assets and liabilities on the lessee’s financial statements under capital/finance lease but not under operational leases, the new approach would require a lessee to recognize assets and liabilities for all leases with a maximum possible term (including any option to extend) of more than 12 months. This new approach also changes lessor accounting that it more accurately reflect the leasing activities of different lessors. The boards received 786 comment letters in response to the 2010 Exposure Draft from entities and organizations from many industries, including nonpublic entities. Some respondents supported the effects of the proposed model, some respondents disagreed with the lessor accounting proposals. The reasons are that it was not consistent with the single accounting model proposed for lessees; it did not support the performance obligation approach; and the existing lessor accounting requirements still work well in practice. Respondents also concerned with the costs and...
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...Proposed Statement of Financial Accounting Concepts Issued: March 11, 2010 Comments Due: July 16, 2010 Conceptual Framework for Financial Reporting: The Reporting Entity This Exposure Draft of a proposed Statement of Financial Accounting Concepts is issued by the Board for public comment. Written comments should be addressed to: Technical Director File Reference No. 1770-100 Responses from interested parties wishing to comment on the Exposure Draft must be received in writing by July 16, 2010. Interested parties should submit their comments by email to director@fasb.org, File Reference No. 1770-100. Those without email may send their comments to the “Technical Director, File Reference No. 1770-100, FASB, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116.” Do not send responses by fax. Please send only one comment letter to either the FASB or the International Accounting Standards Board (IASB), which is also requesting comments on this jointly issued Exposure Draft. The FASB and the IASB will share and consider jointly all comment letters received. Comments are most helpful if they: a. b. c. Indicate the specific paragraph or paragraphs to which the comments relate Contain a clear rationale Include any alternative the Boards should consider. All comments received constitute part of the FASB’s public file. The FASB will make all comments publicly available by posting them to its website and by making them available in its public reference room in Norwalk, Connecticut. An...
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...Running head: EMERGING ISSUES Assignment #2 Emerging Issues Task Force Abstract In 1982, the Financial Accounting Foundation Structure Committee produced a report on operating efficiency that indicated a need for more timely guidance on implementation questions. That report resulted in the formation of an advisory group, which evolved into the Emerging Issues Task Force (EITF). This task force was established to assist the Financial Accounting Standards Board (FASB) in improving financial reporting through the timely identification, discussion, and resolution of financial accounting issues. (FASB, 2011) This paper discusses and explores the EITF in greater detail. Discuss how the Emerging Issues Task Force influences Generally Accepted Accounting Standards. The Emerging Issues Task Force (EITF) was formed in 1984 to respond to the recommendations of the Financial Accounting Standards Board (FASB) task force on timely financial reporting guidance. The EITF influences general accepted accounting standards by providing improved financial reporting through timely identification, discussion, and resolutions within the framework of an existing authority. The EITF designed to reduce diversity in practice on current issues in a quick and timely manner that should not exceed three to four annual meetings. This advisory board also minimizes the need for the FASB to spend time and effort addressing narrow implementation, application, or other emerging issues that...
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...Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Entities True / False Questions 1. Special purpose governments generally provide a wider range of services to their residents than do general purpose governments. True False 2. Examples of general purpose governments include cities, towns, and public schools that receive tax revenue to finance the services they provide. True False 3. The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all state and local governments, both general purpose and special purpose. True False 4. The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all government entities. True False 5. The Financial Accounting Standards Board (FASB) is the body authorized to establish accounting principles for all colleges and universities and health care entities. True False 6. Neither governmental nor not-for-profit entities have residual equity that can be distributed to owners. True False 7. A characteristic common to governmental and not-for-profit organizations is that they do not exist to provide goods or services at a profit or profit equivalent. True False 8. The needs of users of government financial reports are the same as those of users of business entity financial reports. True False 9. The Federal Accounting Standards...
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...International Accounting Standards Board Introduction Accounting plays a very significant role in the success of any business organization as it helps its users make decisions. Different accounting principles grew out of the divergent economic and social environments of various nations and regions. Difference among national accounting become more disconcerting when trade barriers between nations were reduced due to international cooperation developments. Efforts have increased during the past decade to move nations toward using international standards. The International Accounting Standards Board (IASB) is an organization that regulates the accounting standards which are accepted globally by almost all the countries in the world. This paper will first discuss the history of IASB. Next it will explain the structure of IASB. After that, the paper will talk about how International Financial Reporting Standards (IFRS) are created. Finally, it will describe the effort to converge IFRS with Generally Accepted Accounting Principles (GAAP). History of IASB International Accounting Standards Board was first known as International Accounting Standard Committee (IASC) which existed from 1973 to 2001. It was responsible for developing the International Accounting Standards (IASs) and promoting the use and application of these standards. After nearly 25 years of achievement, the IASC concluded that it must find a way to converge between national accounting standards and...
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...CHAPTER 1 Financial Accounting and Accounting Standards ASSIGNMENT CLASSIFICATION TABLE Topics 1. 2. 3. Subject matter of accounting. Environment of accounting. Role of principles, objectives, standards, and accounting theory. Historical development of accounting standards. Authoritative pronouncements and standards-setting bodies. Questions 1 2, 3, 4 5, 6, 7, 8 Cases 1 3, 4 2, 4 4. 8, 9, 10, 11, 12 5, 17 5. 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 23, 24, 25, 26, 27 28 29 6, 7, 8, 10, 11, 12, 13, 15, 16 6. 7. 8. Role of pressure groups. International accounting. Ethical issues. 9, 18, 19 15 14 1-1 ASSIGNMENT CHARACTERISTICS TABLE Item C1-1 C1-2 C1-3 C1-4 C1-5 C1-6 C1-7 C1-8 C1-9 C1-10 C1-11 C1-12 C1-13 C1-14 C1-15 C1-16 C1-17 C1-18 C1-19 Description Financial accounting. Objectives of financial reporting. Accounting numbers and the environment. Need for accounting standards. AICPA’s role in standards setting. FASB role in standards setting. Government role in standards setting. Meaning of generally accepted accounting principles. Politicalization of standards setting. Models for setting accounting standards. Standards-setting terminology. Accounting organizations and documents issued. Accounting pronouncements. Issues involving standards setting. Securities and Exchange Commission. Standards-setting process. History of standards-setting organizations. Economic Consequences. Standards-setting process, economic consequences. Level of Difficulty...
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...have got a legal obligation to prepare financial statement in many countries. The requirements for preparing financial reporting are usually based on adequate mixture of legislation, accounting standards and specific requirements such as stock exchange rules. Those requirements often give different reporting obligation to entities according to their characteristics such as scope and social or economic substance, and business sector. Therefore, Accounting regulators have required different form of reporting and disclosures depending on entities. That is to say, many regulators broadly enforce different reporting obligations to entities in the private and public sectors, while reporting requirements for entities which operate in not for profit sector are less developed. Such different reporting obligation might have brought related issues to entities and furthermore regulators. Because entities have concerned about significant costs relating considerable reporting and compliance. In additions, as getting into step with globalization, the international harmonization of reporting has been increasingly focused on though; regulators still have a tendency to develop different approaches to reporting requirements for entities with different aspects. With recognition of such complication, some accounting regulators have started to re-define and re-examine regarding differential reporting in order to overcome the difficulties so that can help entities provide more relevant, useful and...
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...Death of the Operating Lease Running head: DEATH OF THE OPERATING LEASE 1 Death of the Operating Lease and its Impact on Leading U.S. Companies Mark S. Lynn Mount St. Mary’s University Copyright 2010, Mark S. Lynn Death of the Operating Lease Abstract The proposed elimination of operating lease treatment by the IASB and FASB, as outlined in 2 their discussion paper, Leases – Preliminary Views, will have a varying degree of impact on U.S firms. After a review of the evolution of lease accounting and a discussion of financial ratio analysis, this paper examines the impact of the proposed accounting change on common financial ratios of 142 large public companies. The proposal requiring the capitalization of all lease arrangements is generally detrimental to such financial measurements, with significant variability among industry sectors. Through surveys and interviews, it is further determined that while a majority of corporate financial executives do not support the proposed accounting change, they have yet to analyze the impact and prepare for the effects of the change within their own companies. Copyright 2010, Mark S. Lynn Death of the Operating Lease Death of the Operating Lease and its Impact on Leading U.S. Companies 3 “We are only tenants, and shortly the great Landlord will give us notice that our lease has expired.” ~ Joseph Jefferson (1897, p. 476). A lease is broadly defined as a contract by which an owner of property grants to another...
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...Danisha Williams ACC 537 Paper 1 October 29, 2011 Accounting is very important part of business aspect. This paper will discuss four different topics of accounting: generally accepted accounting practices, effective accounting information, the difference between accrual based accounting and cash basis accounting, and finally the different types of business structure and defining each structure. The topics above will provide accountants with the knowledge that is need in order to be successful. Topic 1 Accountants can use many different accounting principles but there are only a few that are accepted by law known as the generally accepted accounting practices. According to Wikipedia the generally accepted accounting practices are defined as“ accounting rules used to prepare, present and report financial statements for wide variety of entities, including publicly-traded and privately-held companies.” The principles are set by Financial Accounting Standard Board(FASB), Interpretations, and staff positions; APB Opinions and AICPA Accounting Research Bulletins. FASB standard, Interpretations and Staff position. The GAAP are guidelines that all accountants must follow when preparing financial statements for different organization and companies. Each Organization listed above creates the GAAP hierarchy each one is important to the accounting principles for the reason it identifies the sources on the way that financial statements should be prepared. Topic 2 In order to comply...
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...Emerging Issues Task Force Essay Emerging Issues Task Force Abstract In 1982, the Financial Accounting Foundation Structure Committee produced a report on operating efficiency that indicated a need for more timely guidance on implementation questions. That report resulted in the formation of an advisory group, which evolved into the Emerging Issues Task Force (EITF). This task force was established to assist the Financial Accounting Standards Board (FASB) in improving financial reporting through the timely identification, discussion, and resolution of financial accounting issues. (FASB, 2011) This paper discusses and explores the EITF in greater detail. Discuss how the Emerging Issues Task Force influences Generally Accepted Accounting Standards. The Emerging Issues Task Force (EITF) was formed in 1984 to respond to the recommendations of the Financial Accounting Standards Board (FASB) task force on timely financial reporting guidance. The EITF influences general accepted accounting standards by providing improved financial reporting through timely identification, discussion, and resolutions within the framework of an existing authority. The EITF designed to reduce diversity in practice on current issues in a quick and timely manner that should not exceed three to four annual meetings. This advisory board also minimizes the need for the FASB to spend time and effort addressing narrow implementation, application, or other emerging issues that can...
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...Project In July, 2006, the Board voted to add to its agenda a project on lease accounting. The project will be conducted jointly with the US Financial Accounting Standards Board (FASB) and is expected to result in the publication of a joint discussion paper in 2008. The project will reconsider all aspects of lease accounting and is expected to fundamentally revise the way lease contracts are recognized in the financial statements of lessees and lessors. The Board directed the staff to establish a working group of individuals with significant experience and expertise in lease accounting to assist the staff and the Board with this project. (http://www.ifrs.org/Current+Projects/IASB+Projects/Leases/Meeting+Summaries+and+Observer+Notes/IASB+July+2006.htm) To explain the reason for adding the project to the agenda, I find two paragraphs in Exposure Draft that “Leasing is an important source of finance. Therefore, it is important that lease accounting should provide users of financial statements with a complete and understandable picture of an entity’s leasing activities. The existing accounting models for leases require lessees to classify their leases as either finance leases or operating leases. However, those models have been criticized for failing to meet the needs of users of financial statements because they do not provide a faithful representation of leasing transactions. In particular they omit relevant information about rights and obligations that meet the definitions...
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...Financial Crisis Advisory Group July 28, 2009 To the Members of the International Accounting Standards Board and the US Financial Accounting Standards Board: On behalf of the members of the Financial Crisis Advisory Group (FCAG), we are pleased to present our report to the Boards about the standard-setting implications of the global financial crisis. We believe that confidence in the transparency and integrity of financial reporting is critically important to global financial stability and sound economic growth. We hope that our conclusions and recommendations will be helpful to the Boards as they work together to simplify and improve accounting standards on financial instruments and other key areas highlighted by the crisis. The FCAG will be meeting in December to review the progress that has been made. In the meantime, we are available to assist the Boards in their efforts. Sincerely, Harvey J. Goldschmid Co-chair Hans Hoogervorst Co-chair cc: Gerrit Zalm, Chairman of the Board of Trustees, International Accounting Standards Committee Foundation John J. Brennan, Chairman of the Board of Trustees, Financial Accounting Foundation Report of the Financial Crisis Advisory Group – July 28, 2009 Table of Contents Page I. INTRODUCTION _________________________________________________________________________ 1 II. PRINCIPLE 1: Effective Financial Reporting____________________________________________________ 3 Intersection of Prudential Regulation...
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...Accounting Standards Board Renee’ Livious ACC/541 March 11, 2012 Thomas Gruber Accounting Standards Boards For a business to be successful, anything for that matter, guidelines and policies have to be put in place. This also involves internationally run businesses as well. The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have worked diligently through the years to ensure these guidelines are followed. The following discussion will be about the convergence project of boards, their relationship and the relations between their original pronouncements. Discussion will also reflect how the Master’s of Science in Accountancy program prepares the student for a professional life within the accounting vocation. International Accounting Standards Board The IASB, which was once the International Accounting Standards Committee (IASC), is the first international standard-setting body (International Convergence of Accounting Standards—A Brief History) organization based in the United Kingdom that formed in 2001 to advocate harmonization. They strove to make the standards uniformed for national and international companies and have one set of financial statement to accommodate both parties. Their purpose is also to maintain and ensure the standards for accounting are followed and understood...
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