The subject is crucial in today’s environment because individuals need to comprehend the nature of financial statements, and the presentation of such information. Individuals who understand the nature of financial statements claim that alternative methods of accounting may diminish the integrity of financial statements. When one’s accounting approach is questioned by the FASB, it becomes hectic. Some claim that the comparability of financial statements may be undermined, hence; their usefulness may be eroded.
It would be next to impossible for analysts to forecast future earnings if the FASB continues to change the methods and techniques in financial documenting. The introduction of an accounting standard may lead to unpredictable fluctuations that were not expected in the reported earnings. Accounting students may also have a difficult task when learning about accounting. If one takes the time to understand one standard, and the board changes it, later on, there might be problems if one was to take an exam based on the same.
The debate and sides of the debate
The debate is whether the FASB should be allowed to come up with standards every time they see fit. It is impractical to have individuals get used to one standard, and when they do, there is a change in the same effect. The sides involved fell between those that agreed with the standards and those that were resistant to the changes. However, it is the belief of many that any change that is met with resistance and later imposed, will likely lead to improvement.