The Theoretical Foundation of Accounting Principles
The Conceptual Framework Project seeks to revise the Conceptual Framework, setting the standards for financial reporting in the industry. The goals and objectives of the project are to answer a series of questions that will have a profound impact on financial reporting. These include the clarification of the objective of financial reporting, and if financial statements should be prepared from an entity or proprietor perspective. It will detail what are the most important characteristics of accounting information, as well as what is an asset and a liability. The project will discuss whether or not all assets or liabilities be recorded irrespective of the probability that they may be realized or paid, and if matching principle is dead. It also looks to answer if the revenue-recognition principle will survive, or be replaced by the asset-liability view, as well as if an asset should be measured at cost or fair value. Lastly, the project hopes to clarify if " depreciation an outdated concept tied to the matching pri
In addition, others believe that publicly traded entities should be held to the more comprehensive standards, regardless of size. Omitting a GAAP requirement from an audited financial statement, for a small business, may lead to the rendering of a qualified or adverse opinion. The consequences of this standards overload problem are profound for small businesses. It is the requirements of GAAP that are often blamed, in part, for the standards overload problem. This has become particularly burdensome for small business that do not have the economic resources to research and apply the myriad of pronouncements that are issued by this authoritative bodies. In recent years, the FASB, SEC and AICPA have been criticized for imposing too many accounting standards on the business community, resulting in a standards overload problem. Epstein (2007) notes that this has resulted in a long-running debate on whether or not a new set of standards should be developed for small- and medium-sized businesses, or perhaps a slimmed down version of GAAP or IFRS should be established. However, these smaller firms cannot afford the specialists that are available on a centralized basis in larger firms. And, lastly, the standards overload problem doesn't only affect small businesses creating financial documentation, but also negatively affects smaller CPA firms that audit these smaller companies. Consensus on an issue, by the EITF, then becomes considered part of GAAP. In addition, the costs incurred to comply with GAAP requirements may result in a small business forgoing the development of other, more relevant information. These firms must keep up to date on all of the same requirements as large international firms. ) document, the EITF's primary objective is to become aware of emerging issues, in the industry, before they become widespread, and before divergent practices regarding these issues become entrenched. The Emerging Issues Task Force (EITF) is also significant to financial reporting. For this reason, some have recommended "a size test, a system now used in the United Kingdom, which in late 1997 promulgated, as Financial Reporting Standards for Smaller Entities (FRSSE), a single standard containing excerpts from much of existing U.
Common topics in this essay:
Conceptual Framework,
SEC AICPA,
Omitting GAAP,
GAAP Epstein,
Task Force,
Force EITF,
financial reporting,
GAAP IFRS,
Entities FRSSE,
United Kingdom,
standards overload,
Framework Project,
task force,
gaap requirements,
emerging issues,
financial reporting requirements,
reporting requirements,
matching principle,
financial statements,
epstein 2007,
issues task,
emerging issues task,
issues task force,
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Acceptance Essays
