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Critically examine and discuss the impact of lobbying on standard setting in accounting. Illustrate your discussion / your analy - Essay Example

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Critically examine and discuss the impact of lobbying on standard setting in accounting. Illustrate your discussion / your analy

Thus, it is less likely that chairman would not be influenced by the activities of lobbying in the field of setting accounting standards. The lobbying activities in the field of accounting standard setting is directed at influencing the FASB in providing more flexibility to the firm in their accounting practice with no attention towards the safeguarding the long term interests of the firm as well as the investors (Andre, Cazavan-Jeny, Dick, Richard and Walton, 2009, p.24). The intentions of the lobbies are guided by narrow interests of enhancing short term economic value of the firm by allowing relaxations in the accounting standards which are contradictory to the rules and regulations prescribed by FASB. This piece of work is aimed at analyzing the impacts of lobbying on standard setting by FASB in accounting practices of the firms. Issues involved: Lobbying on standard setting in accounting The process of standard setting in accounting is guided by the rules and regulation of Financial Accounting Standards Board (FASB). ...
activities include purposeful intervention with an aim to manipulate the setting of accounting standards with the help of economic activities so that the economic value added to the company could be enhanced (Beresford 1, 1997, p.90). This is, however, viewed to be inconsistent in accordance with the guidelines of the Financial Accounting Standards Board (FASB). The activities of lobbying is aimed at derailing the standard setters from the achieving the objectives as set by the Financial Accounting Standards Board though reporting of consistent financial statements. FASB recommends improvement of transparency in accounting by setting the standards on accounting procedure and providing flexibility in the process of reporting financial statement and accounts. The issues related to lobbying on standard setting in accounting arise when the Congress is influenced by the politically influential constituents which are misdirected to achieve self motivated interests (Beresford 2, 2001, p.85). The lobbying by the accounting firms in the process of standard setting could also lead to improve of accounting standards being set by their clients. This is achieved by addressing the areas of ambiguity in the accounting rules prescribed by Financial Accounting Standards Board. The various issues in case of lobbying in the area of setting accounting standards highlight the interests of the companies to reduce costs and attain flexibility in financial reporting (Bertomeu and Cheynel, 2013, p.814). For example, the accounting standards set by FASB requires the company account to be reviewed on a periodic basis by the auditors. The activities of lobbying are thus aimed to reduce the cost of audit, litigation for the increasing audit requirements as prescribed by the accounting standards. ...Show more

Summary

Impact of lobbying on standard setting in accounting Contents Introduction 3 Issues involved: Lobbying on standard setting in accounting 3 Analysis: impacts of lobbying on standard setting 5 Arguments 7 Conclusion 8 References 10 Introduction The accounting framework is standardized by the Financial Standards Accounting Board (FASB) through various rules and regulations in the field of accounting in order to provide consistent financial information to the users of the financial statements…
Author : jerdemariah
Critically examine and discuss the impact of lobbying on standard setting in accounting. Illustrate your discussion / your analy essay example
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