Some accountants have said that politicalization in the development and acceptan

Question

Some accountants have said that politicalization in the development and
acceptance of generally accepted accounting principles (i.e., standard setting) is
taking place. Some use the term politicalization in a narrow sense to mean the
infl uence by governmental agencies, particularly the SEC, on the development of
generally accepted accounting principles. Others use it more broadly to mean the
compromising that takes place in bodies responsible for developing these principles
because of the infl uence and pressure of interested groups (SEC, American
Accounting Association, businesses through their various organizations, Institute
of Management Accountants, fi nancial analysts, bankers, lawyers, etc.).
Required:
a. The Committee on Accounting Procedure of the AICPA was established
in the mid- to late 1930s and functioned until 1959, at which time the
Accounting Principles Board came into existence. In 1973, the Financial
Accounting Standards Board was formed, and the APB went out of
existence. Do the reasons these groups were formed, their methods of
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28 Chapter 1 • The Development of Accounting Theory
operation while in existence, and the reasons for the demise of the fi rst
two indicate an increasing politicalization (as the term is used in the
broad sense) of accounting standard setting? Explain your answer by
indicating how the CAP, APB, and FASB operated or operate. Cite specifi c
developments that tend to support your answer.
b. What arguments can be raised to support the politicalization of accounting
standard setting?
c. What arguments can be raised against the politicalization of accounting
standard setting? (CMA adapted)

Explanation / Answer

accounting bodies are required to setting best practices

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