History and Development of Accounting Standards Essay

2637 Words Dec 4th, 2005 11 Pages
Accounting has been around since the beginning of civilization. ¡§Accountants participated in the development of cities, trade, and the concepts of wealth and numbers.¡¨ (Giroux) The importance of accounting cannot be overemphasized. Equally important are the standards used to guild the application of accounting practice. Without principles and standards, financial reporting would not fairly present the financial position of a company. Accounting has changed and evolved vastly over time and continues to change. I will discuss the evolution and history of accounting, the Conceptual frame work of accounting, and the governing bodies which shape the standards and principles of accounting practice.
The beginning of civilization occurred during
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People and banks lost huge fortunes, and the public lost faith in the capital markets. There was a consensus that for the economy to recover, the public's faith in the capital markets needed to be restored. Congress held hearings to identify the problems and search for solutions. Based on the findings in these hearings, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. Congress established the Securities and Exchange Commission in 1934 to enforce the newly-passed securities laws, to promote stability in the markets and, most importantly, to protect investors. The SEC was given the mandate to establish accounting principles. Although the SEC was given the authority to govern accounting practice, they believed the private sector had the resources and talent to develop appropriate accounting standards. (Kieso, 6-7)
The American Institute of Certified Public Accountants and its predecessors have a history dating back to 1887, when the American Association of Public Accountants was formed. In 1916, the American Association was succeeded by the Institute of Public Accountants, at which time there was a membership of 1,150. The name was changed to the American Institute of Accountants in 1917 and remained so until 1957, when the name was again changed to the American Institute of Certified Public Accountants. The American Society of Certified Public Accountants was formed in 1921 and acted as a federation of state…