According to the American Institute of Certified Public Accountants (AICPA) website, it was founded in 1887. Accountancy was established as a distinguished profession with thorough educational requirements, high standards and a strict code of ethics. According to the financial accounting Standard Board (FASB), private non-profit organization responsible for developing and interpreting the (GAAP) in the United States but it is not affiliated with US government. Two committees were created by the AICPA in 1971. The Wheat committee was in charge of determining how the accounting principals were to be established. This committee suggested that the original accounting principal board be eliminated and it was replaced with the FASB “this new board was to comprise representatives from various organizations” (Schroeder, R. G., Clark, M. W., & Cathey, J. M. 2011, p. 9 par 2).
The Trueblood committee was in charge of studying the objectives of the financial statements “the study group requested that its reports… in developing objectives and significant efforts should be made to continue progress” (Schroeder, R. G., Clark, M. W., & Cathey, J. M. 2011, p. 9 par 3).
The hierarchy of the FASB, consist of a board of trustees, American Accounting Association, the AICPA, Financial Executive Institute, Financial Analyst Federation and the National Association of Accountants “The name was later changed in 1997 to the Institute Management of Accountants” (Schroeder, R. G., Clark, M. W., & Cathey, J. M. 2011, p.9 par 3) The Financial Accounting Foundation (FAF) governs the FASB. The FAF is charge of appointing the Financial Accounting Standards Advisory Council (FASAC).
The Essay on Securities And Exchange Commission Accounting Financial Standards
Introduction The Accounting profession has been established since the early 1900 s. The profession has continued to develop in response to the needs of users of financial statements for financial information to support decisions and informed judgments. This paper will discuss the various accounting standards and their relationships, accounting theories, and evaluate the role of ethics in ...
The FASAC helps the FASB make decision on policies and to work through the agenda.
Furthermore, the minimum number of members is twenty members “the bylaws at least call for at least twenty members to be appointed” (Schroeder, R. G., Clark, M. W., & Cathey, J. M. 2011, p.9 par 5) throughout the years it has experience an increase in members to be able to cater to a better audience. Many companies seeking international opportunities found roadblocks that became time consuming and ineffective “companies seeking capital or investment opportunities across national boundaries face cost and time issue” (Schroeder, R. G., Clark, M. W., & Cathey, J. M. 2011, p. 25 par 1) Due to discrepancies on the reports it was important to create a balance in international accounting.
In 1973, the international accounting board (IASB) was formed and the purpose of this was to create and publish accounting standards with the intention to be accepted worldwide and observed in the presentation of financial statements. To generally to work for the progress and harmonization of the regulations and improvement of the financial accounting standards “the objective of the financial statement is to provide useful information to a wide range of users for decision- making purpose” (Schroeder, R. G., Clark, M. W., & Cathey, J. M. 2011, p. 26 par 4).
Just like the FASB the IASB has developed a conceptual framework. The FASB and IASB goal is to bridge the gap between national and international accounting standards. The FASB and IASB have similar conceptual frameworks as a result similar standards “it would be expected that similar conceptual frameworks would result in similar standards” (Schroeder, R. G., Clark, M. W., & Cathey, J. M. 2011, p. 103 par 1).
The Essay on Materiality In Financial Statements
It is the responsibility of an independent auditor to plan and perform an audit of financial statements that will provide reasonable assurance of detecting errors and irregularities that are material in nature. According to the Financial Accounting Standards Board, the essence of the concept of materiality is: “The omission or misstatement of an item in a financial report is material if, in ...
The statements of financial reporting for the FASB conceptual framework are as follows: (1) SFAC No. 1 “Objectives of Financial Reporting by Business Enterprises”, (2) SFAC No. 2 “Qualitative Characteristics of Accounting Information”, (3) SFAC No. 5 “Recognition and Measurement in Financial Statements of Business Enterprises”, (4) SFAC No. 6 “Elements of Financial Statements” and (5) SFAC No. 7. “Using Cash Flow Information and Present Value in Accounting Measurements”. Moreover, the preparation and presentation of financial statement for IASB framework consist of the following: 1. the objective of financial statements, 2. Qualitative characteristics of financial statements, 3. The elements of financial statements, 4. Recognition of the elements of financial statements, 5. Measurement of the elements of financial statements and 6. Concepts of capital and capital maintenance. The Primary qualities, relevance and reliability are useful for decision making. The information has to be accurate, this helps the internal user makes decision that will benefit the company. To determine whether or not changes should be made to improve profitability or it continues to remain the same.
Furthermore, with the proper documentation the information should be reliable because this can determine whether external users such as creditors will lend money to continue company’s operations and the stockholders can decide to maintain or buy more shares with the company or sell them. Secondary qualities, comparability and consistency help the decision makers to look at companies past performance and determine if the company needs to make changes. It also help user decision makers to compare what the competitions is doing to improve their profitability “enables users to identify the real similarities and differences in economic events between companies” (Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. 2007, p. 33).
The information presented must be verifiable the IASB information is not subject to verifiability. However, the IASB does not give any priority to any of the qualities; it treats them as equals.
The relative of these qualities should be at the judgment of a professional. The FASB framework recognizes all the elements of the income statement and the IASB only recognized two. Furthermore the FASB defines the ten elements of a financial statement meanwhile the IASB defines only five of them. It is important to note that the two frameworks are similar but the difference between the two is that the conceptual framework for the FASB is precise and more in detail than the IASB framework. According to Schroeder, Clark & Cathey, the FASB and IASB have partnered to work together in creating a joint standard for the presentation of financial statements which will address the presentation and display of financial statements and other issues including: The relationship between items across financial statements (the cohesiveness objective), The disaggregation of information so that it is useful in predicting an entity’s future cash flows (the disaggregation objective) and the provision of information to help users assess an entity’s liquidity and financial flexibility (the liquidity and financial flexibility objective).
The Essay on Framework For The Preparation And Presentation Of Financial Statements
... Financial Information and SAC 4 Definition and Recognition of the Elements of Financial Statements) that overlap with the Framework for the Preparation and Presentation of Financial Statements ...
These objectives are based on the two conceptual frameworks from both entities. The Master of Science in Accountancy program helps students learn and understand the theory and principles of accounting. Provide the tools to resolve problems and issues that can arise in the accounting field. It helps the student developed leadership, communication and critical thinking skills. The courses also prepare the student for the CPA examination towards completion the student will obtain certification.
