BRIEFLY DESCRIBE THE WAY THAT ACCOUNTING MEASUREMENT RULES (GAAP) ARE DETERMINED IN THE US.?

Briefly report the approach which accounting dimensions manners (GAAP) have been dynamic in the US. Why do we consider which the unchanging set of accounting manners is necessary?

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Sandy April 16, 2010 at 2:50 pm

Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting. Those standards govern the preparation of financial statements.

The Board turns to many other organizations and groups for advice and information on various matters, including its agenda. As part of the agenda process, the Board may make available for public comment agenda proposals that concisely describe the scope of potential projects.

After receiving input from the constituency and consultation with the other members of the FASB, FASAC, and others as appropriate, the chairman decides what projects to add to the Board’s technical agenda. To aid in that decision-making process, the following is a list of factors used to assist in thoroughly evaluating projects. Those factors include consideration of:

Pervasiveness of the issue—the extent to which an issue is troublesome to users, preparers, auditors, or others; the extent to which there is diversity of practice; and the likely duration of the issue (i.e., whether transitory or likely to persist);

Alternative solutions—the extent to which one or more alternative solutions that will improve financial reporting in terms of relevance, reliability, and comparability are likely to be developed;

Technical feasibility—the extent to which a technically sound solution can be developed or whether the project under consideration should await completion of other projects;

Practical consequences—the extent to which an improved accounting solution is likely to be acceptable generally, and the extent to which addressing a particular subject (or not addressing it) might cause others to act, e.g., the SEC or Congress;

Convergence possibilities—the extent to which there is an opportunity to eliminate significant differences in standards or practices between the U.S. and other countries with a resulting improvement in the quality of U.S. standards; the extent to which it is likely that a common solution can be reached; and the extent to which any significant impediments to convergence can be identified;

Cooperative opportunities—the extent to which there is international support by one or more other standard setters for undertaking the project jointly or through other cooperative means with the FASB; and

Resources—the extent to which there are adequate resources and expertise available from the FASB, the International Accounting Standards Board (IASB), or another standard setter to complete the project; and whether the FASB can leverage off the resources of another standard setter in addressing the issue (and perhaps thereby add the project at a relatively low incremental cost).

Consistency enhances comparability, for a single entity from one period to another, between 2 entities within the same industry, and among entities from various industries.

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