chapter 1
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Chapter 1. Financial Accounting Standards. Standard Setters. Securities and Exchange Commission (SEC). Formed to administer the Securities Act of 1934. Oversees the development of Generally Accepted Accounting Principles (GAAP). - PowerPoint PPT PresentationTRANSCRIPT
Chapter 1Chapter 1
Financial Accounting Standards
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Standard SettersStandard SettersSecurities and Exchange Commission
(SEC). Formed to administer the Securities Act of 1934.
Oversees the development of Generally Accepted Accounting Principles (GAAP).
Encouraged the development of the first “private” standard-setting body, the CAP (next slide).
SEC sits on FASB’s (Slide 4) Emerging Issues Task Force (EITF).
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Standard SettersStandard SettersAmerican Institute of Certified Public
Accountants (AICPA)– Committee on Accounting Procedure
(CAP), 1939-1959; issued Accounting Research Bulletins (ARB).
– Accounting Principles Board (APB), 1959-1973; issued APB Opinions (APBO).
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Standard SettersStandard SettersFinancial Accounting Standards Board
(FASB), 1973 to present.– Funded by Financial Accounting
Foundation (FAF).– Benefits: smaller Board; full-time, paid
members; independent; broader representation.
– Wheat Committee (1972) recommended an independent standard-setting structure.
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FASB CodificationFASB CodificationFASB issues a number of pronouncements
containing GAAP: Standards, Interpretations, Technical Bulletins, Implementation Guides, EITF Statements.
To organize GAAP, FASB developed the Accounting Standards Codification (ASC).
All GAAP pronouncements are organized by topic and subtopic, and make it easier to research GAAP issues.
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FASB CodificationFASB CodificationFASB issues a number of pronouncements
containing GAAP: Standards, Interpretations, Technical Bulletins, Implementation Guides.
To organize GAAP, FASB developed the Accounting Standards Codification (ASC).
All GAAP pronouncements are organized by topic and subtopic, and make it easier to research GAAP issues.
You will research several issues this semester using the Codification.
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International Accounting Standards International Accounting Standards Board (IASB)Board (IASB)
The IASB issues International Financial Reporting Standards (IFRS).
The predecessor to the IASB was the International Accounting Standards Committee (IASC); the IASC issued International Accounting Standards (IAS).
Over 115 countries currently use IFRS as their primary financial reporting standard.
The U.S., through the FASB and the SEC, has been working with the IASB on a number of issues, with the goal of achieving convergence with IFRS by 2015.
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Professional Reputation and EthicsProfessional Reputation and EthicsEthical behavior is in the long-run interest of
managers, stockholders, and auditors.Many companies, universities, and
professional organizations have enacted increased emphasis on ethics.
Auditors’ reputations are integral to their ability to perform their duties. High ethical conduct is imperative to their continued success.
A number of companies, and their auditors, have been exposed in recent years for their fraudulent financial reporting. Some of these ethical failures will be discussed this semester.
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