FINANCIAL ACCOUNTING FOUNDATION - FINANCIAL ACCOUNTING STANDARDS BOARD - STATEMENT OF POSITION ON STUDY ENTITLED 'THE ACCOUNTING ESTABLISHMENT' DATED DECEMBER 1976 (FROM ACCOUNTING AND AUDITING PRACTICES ... SEE NCJ-65581)

• NCJ Number: 65585
• Date Published: 1977
• Length: 133 pages
• Corporate Author: Financial Accounting Foundation; Financial Accounting Standards Board
• Sale Source: National Institute of Justice/
• Publication Type: Legislative/Regulatory Material
• Language: English
• Country: United States of America

Annotation

THE RESPONSE OF THE FINANCIAL ACCOUNTING FOUNDATION AND THE FINANCIAL ACCOUNTING STANDARDS BOARD TO A SENATE SUBCOMMITTEE'S STAFF REPORT ADVOCATING GREATER GOVERNMENT CONTROL OVER ACCOUNTING STANDARDS IS PRESENTED.

Abstract

THE STAFF OF THE SENATE SUBCOMMITTEE ON REPORTS, ACCOUNTING, AND MANAGEMENT IN ITS REPORT ENTITLED 'THE ACCOUNTING ESTABLISHMENT' ADVOCATES THE FEDERAL GOVERNMENT'S ASSUMING THE DIRECT RESPONSIBILITY FOR FINANCIAL ACCOUNTING STANDARDS FOR PUBLICLY OWNED CORPORATIONS. THE FINANCIAL ACCOUNTING FOUNDATION AND THE FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) DISAGREE WITH THIS POSITION BASED ON THE FOLLOWING ARGUMENTS: (1) THE PUBLIC INTEREST WILL BE SERVED BEST IF THE ACCOUNTING STANDARD-SETTNG PROCESS REMAINS IN THE PRIVATE SECTOR WITH EFFECTIVE REVIEW AND PARTICIPATION BY THE SECURITIES AND EXCHANGE COMMISSION; (2) THE FASB IS INDEPENDENT AND OBJECTIVE IN ITS WORK AND, WITH ITS DUE PROCESS PROCEDURES FOR PUBLIC PARTICIPATION, HAS ACHIEVED ACKNOWLEDGED SUCCESS IN IMPROVING THE QUALITY OF FINANCIAL INFORMATION AVAILABLE TO THE AMERICAN CAPITAL MARKETS; AND (3) THE FASB IS THE MOST EFFECTIVE AND PROMISING VEHICLE FOR ADVANCING ACCOUNTING STANDARDS NECESSARY TO MAINTAIN AND ENHANCE THE STRENGTH OF THE CAPITAL MARKETS. FURTHER, THE GOVERNMENT, BY ATTEMPTING TO IMPLEMENT NATIONAL POLICY THROUGH ACCOUNTING STANDARDS, COULD DIVERT FINANCIAL REPORTING AWAY FROM THE PRIMARY PURPOSE OF FURNISHING OBJECTIVE INFORMATION NEEDED FOR EFFECTIVE, EFFICIENT, AND EQUITABLE ALLOCATION OF THE NATION'S RESOURCES. EXTENSIVE FEDERAL INVOLVEMENT IN STANDARD-SETTING COULD ALSO DISSIPATE THE EFFORTS THE FASB HAS ALREADY EXERTED IN THIS AREA. FINALLY, GOVERNMENT INTERVENTION COULD CHANGE THE PROCESS OF STANDARD-SETTING FROM A COOPERATIVE ENDEAVOR BETWEEN GOVERNMENT AND THE PRIVATE SECTOR TO AN ADVERSARIAL PROCESS. THE PROCEDURE BY WHICH THE FASB SETS ACCOUNTING STANDARDS IS DESCRIBED TO SHOW ITS OBJECTIVITY AND THE OPPORTUNITY PRESENTED FOR A WIDE RANGE OF INPUT.