Approaches to Standard Setting in Accounting Essay

Approaches to Standard Setting in Accounting - Essay ExampleThe body besides cited the reasons at which it was setting these accounting settings and some of them included to bewilder users of accounting cultivation about their financial situation, their financial performance, and the financial conduct of a firm (LeRoy, 2007). An another(prenominal) reason was to assist public accountants with steps to modify them perform their work with care in offering their services in the accounting market. These standards were set so that all financial statements were consistent and had the ability to chance on their financial performance. These accounting standards can also be known as Generally Accepted Accounting Principles (GAAP), they are generally accepted because there is an unequivocal accounting body that set them and the body oversees the implementation of these standards. Without these standards the consumers of financial statements would need to learn accounting rules of differ ent firms, this would be a difficult task for multi investors to canvass these financial statement accounting rules. Some of the bodies that regulate these accounting standards are the Securities and Exchange Commission (SEC). This body was formed to establish these accounting standards for the public traded firms. ... then the financial Accounting Standards Board (FASB) was created after the wheat committee suggested the replacement of the GAAP board with saucy standards. After the dissolving the FASB board a new board International Accounting Standards Committee (IASC) was formed in 1973. This board was created to encourage a worldwide implementation of the accounting standards. This board was succeeded by a private sector body that was structured in a similar way as FASB (Sharpe, 1982). The accounting standards and regulations are very important. This is because they regulate accounting assumptions and methods. They also enable us to have consistency in the methods that are us ed to organize companys financial statements. Although there are differences within these regulations, veritable conclusions can be deduced when comparing firms financial data for specific industries. If there were no accounting standards then the people who use financial statements like investors, banks and other institutions would require learning these accounting rules in a different manner for each firm. The accounting standards instill relevance to day to day accounting procedures and processes this results into offend financial performance from firms and represents faithfulness and accuracy (Sharpe, 1982). These standards ensure that neutral information is used hence eliminating the possibility of biasness in the financial statements. They give relevant information by enabling investors to know their specific points of investments to make. They save a lot of time since they give or point out clarity in the financial statements. The growth of financial transactions is making the compliance with accounting standards become an issue which require addressing immediately