Critically Evaluate the Need for Accounting Standards and the Need for a Set of Principles on Which They Are Based

The Financial Accounting Standards Board goes through an elaborate information gathering process before issuing their standards. Firstly, an issue is identified and placed on the Board 's agenda by the Emerging Issues Task Force. Secondly, a task force of knowledgeable persons is appointed to advise the Board on the issue. Thirdly, the Board 's technical staff investigates the issue. Fourthly, a discussion memorandum on the issue is then written and distributed to interested parties. Fifthly, the

Research: The Financial Accounting Standards Board (FASB) was founded in 1973 as a private and independent organization governed by the Securities Exchange Commission (SEC). The organization’s primary purpose is to establish the rules and standards of Generally Accepted Accounting Principles (GAAP) for the interest of the public. (“Facts about FASB”) “Since its inception in 1973, the FASB has issued 168 Statements of Financial Accounting Standards and a series of concepts statements”. (Facts about FASB, n.d.) The FASB's mission is "to establish and improve standards of financial accounting and reporting for the guidance and education of the public,

Accounting standards are important. For example, if accounting is considered as the language of business, accounting standards are its grammar. Properly developed and implemented, they can encourage business expansion and help regulate the economic system. High-quality accounting standards can facilitate the flow of information from businesses to a range of different users. These include investors, banks, creditors, the revenue commissioners, regulators, employees and the general public. The availability of accounts prepared in accordance with recognized accounting standards encourages trade by promoting confidence in businesses.

As the complexity of our financial economy develops it is important that our accounting standards progress in accordance. Accounting is very important to the development of the global and local economies. Accounting is basically the gathering, summarizing and presenting of financial information of an entity to interested internal, external and possible investors. This information should be presented in a non-bias way so that other people are able understand.

Accounting has been playing a very important role in many places such as Australian accounting standards. Australian accounting standards is also developed by the Australian Accounting Standards Board (AASB). This essay will firstly discuss what AASB is, the role and the functions of AASB. And then, following this, the other projects’ role such as Financial Reporting Council (FRC) and International Accounting Standards Board (IASB) and the relationship between AASB, FRC and IASB.

As accountants and auditors we are held to, and must comply with, two standards of professional conduct. Those standards are generally accepted accounting principles (GAAP) and generally accepted auditing standards (GAAS). GAAP enforces the uniform standards for preparing and presenting financial statements. GAAS governs the ways and means are used by public accountants when conducting an audit. GAAS establishes the standards for field work and mandates that sufficient evidence be found to provide reasonable assurance for issuing an audit opinion.

To over view the knowledge we learnt from accounting theory and practice, the main thing I can conclude that is the tendency of accounting will shift away from technical way to people’s behaviour way. By understanding what should do, we should ask why and how we could improve and change it into a better way. This essay aims to explain how the theoretical material that we learn in lectures can be developed under a real practical manner.

The Morley (2012) website states that generally accepted accounting principles are standards that determine how accountants in the U.S. “Conduct and format their reports are determined by the FASB, U.S. Accounting records must be seen by a number of people outside of the organization for transparency purposes” (Morley, 2012). The Morley (2012) website states that if each company created its own accounting reporting methods, comparing financial statements would be inefficient and hiding information would be easier. According to the FASB, entities such as the U.S. Securities Exchange Commission and the American Institute of Certified Public Accountants recognize FASB's authority to set standards. This law ensures that no money is pocketed without being taxed and that all revenues are reported. As far as general financial ethical standards, “financial professionals have obligations to be competent, accountants and financial professionals must not only have secured education and practice that prepares them for their positions, but they must also continue that education by learning new information that can affect their practices” (Morley, 2012). According to “Associations For Financial Professionals” (2012), “financial professionals have an obligation to their

uses the Generally Accepted Accounting Principles as a regulatory requirement for managing financial resources. These are the guidelines and practices that are accepted in the field of accounting internationally in standardizing financial documents such as balance sheets, cash flow statements and income statements. The organization follows these principles in reporting its financial information. The absence of these standards would give the organization staff the privileges in divulging financial information at their individual expense and not at the company’s thus affecting its overall credibility to investors and

Generally Accepted Accounting Principles are standards in accounting that are used in America to enable the recording and reporting of financial information in a uniform way. These standards are established by the Financial Accounting Standards Board with is the body that is responsible for developing and establishing these standards in the United States. Currently, the body is mandated with the task of setting up accounting standards for non-governmental organizations. While GAAP is mainly used as the accounting standards for financial recording and reporting, the source of this principle originates from various places because there is no single reference for them.

Accounting standard are the accounting rules that accounting entity need to follow in reporting the financial statement.Accounting standard concerns with how assets and liabilities should be measureed in identified in the statements. Traditionally each country develop it own standard. In Australia, every business entity need to follow the Australia accounting standard which is set by Austrailia Accounting Standard Board (AASB). Here are the two accounting standard set by AASB:

This needs the management to analyse the reason to adopt the accounting standards and to follow the strategies that are quite important to present the business information. The objective is to present the accurate and reliable business information with the members and to accommodate the financial details for the financial year. Any deviation in the information presentation is reduced by including the exact and accurate information incurred during the financial year. This avoids any sort of financial deviations that impacts the reliability of the company.

Generally accepted accounting principles allows the accounting profession to follow a recognized organization of objectives, to provide a structure for solving problems, to improve the understanding of financial statement and confidence in financial reporting, and to develop contrast among companies financial statements that can be generally accepted and universally practiced, “generally accepted” means that a reliable accounting organization has developed a standard of reporting that has been accepted because of the universal application (pg. 6, Kieso, Weygandt, & Warfield, 2007). There are four organizations that are evolved in the

It is important to be aware that financial accounting is an area in accounting where all financial transactions of the corporation are recorded in. It is a process that through time has become the systematic way for record keeping of all off a corporation’s transactions in order to be able to report the data in an efficient manner. It is because of this that is so highly regulated by the reporting authorities. The framework laid out by the IASB. It is within these standards that all the rules and regulations relevant to all aspects of accounting are laid out. These standards are prepared and explained in a very simplified, yet comprehensive manner, in order to allow financial accountants to perform their day to day operations. Moreover, it is to ensure that there is conformity and uniformity in all aspects of

The concepts in the conceptual framework are being created in an orderly manner which makes the financial reporting consistent and logical. There is also increased comparability of standards from company to company or from year to year. The conceptual framework also ensures that there is consistency internally in the accounting standards. In addition the framework also establishes precise definitions that facilitate discussion of accounting issues and it also helps preparers and auditors in resolving financial problems in the absence of an accounting standard. Since a theory of accounting that can be applied on specific problems is provided in the conceptual framework, the volume of accounting standards is