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D Solomons, The Political Implications of Accounting and Accounting Standard Setting, Accounting and Business Research, 1983

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SPRING 1983

107

The Political Implications of Accounting and Accounting Standard Setting* David Solomons

It is now some fifty years since a few concerned individuals in America began discussions lhat have broughl us to the position where. in our two countries. accounting standards, carrying varying

degrees of authority, are an established pari of the financial reporling scene. I wish I could have found" significant date as long ago as that in the British history of standard selling. After all, the Scollish Institule had by then pas ed its 75th birthday and the English Institute was celebrating its fiftieth. But any kind of institutional interesl in accounting standards in the UK belongs to a later period. I

arguments for not permitting complete freedom in the choice of reporting methods. The first argument is that the market cannot be depended on to discipline promptly corporations that are left free to choose "hat to report and ho\V to report to their investors and creditors. Even if good accounting can be relied on to drive out bad in the long run. too much damage may be inflicted on investor in the short run to make

By now, however, there is general agree-

mcn t that. though not everyone likes the position
we...

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