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Team C:Angela Foster, Jacqueline Williams, Matthew Fryman, and Robin Ramos Date:May 2nd, 2011
Re:Week Two Team Assignment

Case 1-3: Politicalization of Accounting Standards
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 operation while in existence, and the reasons for the demise of the first two indicate an increasing politicalization (as the term is used in the broad sense) of accounting standard setting? Explain you answer by indicating how the CAP, APB, and FASB operated or operate. Cite specific 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?

Case 1-4: Generally Accepted Accounting Principles
a) Explain the meaning of the term accounting principles as used in the audit report. (Do not in this part discuss the significance of “generally accepted.”)

b) The president wants to know how you determine whether or not an accounting principle is generally accepted. Discuss the sources of evidence for determining whether an accounting principle has substantial authoritative support.

c) The president believes that diversity in accounting practice will always exist among independent entities despite continual improvements in comparability. Discuss the arguments that support his belief.

Accounting issues that are not fully addressed by accounting pronouncements will continue to emerge as “new types of transactions, variations in accounting for existing types of transactions, new types of securities, and new products and services”...
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