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In 1973 the Financial Accounting Standards Board (FASB) was established to set the financial accounting standards in the United States of America for nongovernmental entities. These standards are collectively called U.S. Generally accepted Accounting Principles, or U.S. GAAP. The Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants acknowledge the authority of these standards (FASB, n.d). A “proven, independent due process” is used to collect the viewpoints of the financial statements prepares and users for the constant improvement of these standards. An Accounting Status Update(ASU) is not an authoritative source however documents the amendments to communicate the changes in the FASB Codification for a user to understand the reason and future of those changes (FASB, n.d).

The field of accounting is constantly evolving. This is true not only for the theory of accounting itself but also the entities that govern its theory and practice. Presently, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are faced with some of the biggest challenges to date. To understand the significance of these two boards, it is necessary to understand their histories, relations between the boards, and the standards that they set. Also how the knowledge of these boards and the field they lead, gained through the masters of science in accountancy

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.

It is very difficult for political and social goals to not influence US accounting standard setting. According to Solomons (1978, p. 65) quoting Charles Horngren, “the setting of accounting standards is as much a product of political action as of flawless logic or empirical findings. Why? Because the setting of standards is a social decision. Standards place restrictions on behavior; therefore, they must be accepted by the affected parties…getting acceptance is an exceedingly complicated process that requires skillful marketing in a political arena.” When a person or group of people see an issue that they feel needs to be addressed, they are going to want it handled in the way most desirable to them and their position. Hand in hand with

The standard setting process is governed by the FASB, but the decisions they make ultimately affect the corporations that have to adopt these accounting standards. Operating in a manner that does not take into account the views of the governed bodies would be unjust and would create a large disparity between the two bodies. Knowing that accounting rules affect human behavior, Dale Gerboth argues that politics is the only way to command others to follow rules. Political accounting is the main reason that accountants in the first place had a positive perception and the confidence of the public. Since the government has an inside knowledge of the goals and health of the economy, they can direct accountants to determine what is the most relevant information and display the information in a way that is most beneficial to the final users. By having government influence in politics, it sets a restriction on behavior whether voluntarily or by force. These restrictions were agreed upon by all parties in the society and represent the best interest of the society. Without government influence in accounting standards, standards would be chaotic as there would be no focus on what is the best for the economy. In conclusion, as governments have the best vision, and understand the weaknesses of the economy they are most capable of providing input for the accounting

According to the research, Accounting standards exist to facilitate the preparation of high-quality and consistent general purpose financial statements to convey the useful information about the general financial condition and results related to reporting entities, such as companies, non-profit corporations and governments. And Australia adopted International Financial Reporting Standards (IFRS) in 2005, as directed by the Financial Reporting Council in its 2002 directive to the AASB. The Australian Accounting Standards Board has published AASB 15 Revenue from Contracts and Customers, the Australian equivalent of its international namesake, IFRS 15. And the purpose of the new Standards is to provide (except in relation to some specific exceptions, such as lease contracts and insurance contracts) a single source of accounting requirements for all contracts with customers, thereby replacing all current accounting pronouncements on revenue.

A variety of parties are interested in and affected by the development of accounting standards. Various users of accounting information have discovered that the best way to impact the formulation of accounting standards is to attempt to influence the standard setters. The CAP, APB, and FASB have all come

Over the last decade, the way in which financial reporting is carried out has seen some significant advancements. One of the most momentous changes has been the introduction of International Financial Reporting Standards (IFRS), which have been adopted broadly throughout the world, with one major exception, the United States. Before accounting standards can be considered truly global, this exception has to be resolved. The prospect of such an occurrence took massive strides in 2002, when the Financial Accounting Standards Board (FASB); responsible for standard-setting in the US, announced their intention to work alongside the IASB in order to converge IFRS with US GAAP. For the first time, a truly global set of accounting standards seemed a

These standards are made to satisfy the diversified need of all stakeholders. All information related with the accounting information for all stakeholders is given in the standards. For the government, capital assets do not contribute to future cash flows. The notion of accountability used in the reporting entity.

According to Lutz and Eberle (2008), a lot of countries prefer to have their own standards because culture plays a big role in developing and setting national accounting standards. Thus, compliance with international

The objective of this report is responding to a recently convened focus group of the Australian Accounting Standards Board (AASB) on whether the standard setters should consider a move to a single measurement approach.

CHAPTER 13 Standard Setting: Political Issues 13.1 13.2 Overview Two Theories of Regulation 13.2.1 The Public Interest Theory 13.2.2 The Interest Group Theory 13.2.3Which Theory of Regulation Applies to Standard Setting? 13.3 Conflict and Compromise 13.3.1 An Example of Constituency Conflict 13.3.2 Comprehensive Income 13.3.3 Conclusion re Comprehensive income 13.4 13.5 Rules-Based v. Principles-based Accounting Standards Criteria for Standard Setting 13.5.1 Decision Usefulness 13.5.2 Reduction of Information Asymmetry 13.5.3 Economic Consequences of New Standards 13.5.4 The Political Aspects of Standard Setting 13.5.5 Summary 13.6 International Integration of Capital Markets

This paper follows the previous papers showing that there are needs for harmonization across the globe in order for accounting standards to not be affected in a negative way. The best way to make this happen is by adopting the same set of standards across the globe and stick by them. This paper will show how the adoption of these standards will benefit countries globally by using the United States alone as an example. As a matter of fact, the effects on U.S. reporting practices are likely to be limited. Nonetheless, there could be a significant impact accounting reporting processes and systems. Therefore our focus will be on the costs to implement the solution. The major out-of-pocket costs will probably occur during the transition phase,

accounting standard setters from Australia, Canada, New Zealand, the United Kingdom, and the United States plus the International Accounting Standards Committee.

At the World Bank Conference held in 1999, Jules W. Muis aptly states “….power to control the language of business is important. Standard setters will come ahead as the world grows smaller, and economic independence is no longer an option but a reality. So it happens that today a good observer can see the preparations of battle for the control of the international language of business slowly unfolds…” In this context, the statement of Harvey Pitt, US SEC Chairman at SEC Conference, (2002) is worth mentioning, “High quality global accounting standards are needed to improve the ability of investors to make informed financial decisions. Companies must keep pace with this progress in order to promote and protect their business credibility in the international market place.” It is for this reason that the convergence of accounting standards is so important. The process of convergence is accepted as the key factor to implement a single set of accounting standards across the globe. The paper follows a scholarly search approach to discuss the recent status of harmonization in accounting practices. 2. Objectives The objectives of current study are very straight forward. The very basic issue is to explain the need of harmonization in practices. Later on, it focuses on the regulatory authorities who are working actively to bring the convergence into practice. The paper also presents