Attempts towards standardisation, Accounting Standards

Standardization in UK and USA: although the Institute of Chartered Accountants in England and Wales began creating recommendations as 1942, real progress started along with the establishment of the Accounting Statements Committee (ASC) via the Institute in the year 1969 in the wake of public criticism of financial reporting methods that permitted various practices. As a consequence of diversity in practices some huge investors had suffered heavy losses in their investments in famous companies. The major objective of the ASC has been to narrow regions of difference and in the variety in accounting practices. The procedure utilized for standardization is initiated via the issue of an "Exposure Draft" on an exact topic for discussion through accountants and the public at large. Comments made on exposure draft are taken in consideration while drawing up a formal statement of the accounting methods for dealing along with that exact topic. The statement is termed as a Statement of Standard Accounting Practice (SSAP). One time the statement of standard accounting practice is adopted through the accounting profession, here the fact that, a statement has been issued through the Institute in itself implies the acceptance through the profession, any material departure through any company by the standard practice in presenting its financial reports is to be disclosed in such report. So far, standard accounting practice's nineteen statements, in addition to several exposure drafts in consideration, have been issued through the ASC.

The need for evolving standards in the United States of America was felt along with the establishment of SEC that is Securities Exchange Commission in the year 1933. The Securities Exchange Commission is the Government agency which regulates and controls the issuance of companies and dealings in, securities of the companies. A research oriented organization termed by the Accounting Principles Boards i.e. APB was formed in the 1957 year to spell out the fundamental accounting postulates. FASB i.e. the Financial Accounting Standards Board was formed in the 1973 year. The Financial Accounting Standards Board specified statements from time to time, articulating GAAP i.e. the generally accepted accounting principles. The constant support specified by SEC to Financial Accounting Standards Board pronouncements has specified considerable credibility to its accounting policy statement. The Financial Accounting Standards Board, till the 1985 year, has specified five statements of concepts and eighty-eight statements of financial accounting standards.

Posted Date: 4/3/2013 6:05:02 AM | Location : United States

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