The Political Nature of Accounting Standard Setting

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The political process of the adoption of IAS’s and harmonising these standards with the AAS’s has had far reaching impacts. This may be due to the influences of the government, boards, corporations and regulatory bodies involved in dominating the process, which can be seen through a brief look at the history of the actions taken by each of these parties to change the accounting world. There are visible benefits to the parties who influenced the changes in both economical and social ways. Along with benefits for some parties comes disadvantages to those who lost their influential power. The make up of the Boards gives rise to questions as to what the goals of the boards are both in the near future as well as in the long run. The timeliness of going from harmonisation to standardisation and what the consequences were are also noteworthy as are the objectives of those involved.

A look into the development of the current accounting standards opens the eyes to the seemingly invisible forces behind them and the impacts this has had on all stakeholders. There are always winners and losers in a battle for power and self-interests and we will look at what the outcomes for these are. We will also look at the goals of the IASB, AASB and FRC as we untangle the web of financial influences over non-financial prey as well as the positive impacts the changes have brought with them. In summary, the political nature of setting accounting standards has had many influences and impacts depending on the stakeholders involved. THE BODY

History proves standard-setting to be a political process
1946 – ‘Recommendations of Accounting Principles’ first issued. (Walker 1987 pp. 269) 1970’s – Statement of accounting standards issued
1977 – Accounting Standards Review Committee appointed. (Walker 1987 pp. 272) 1978 – Amalgamation of ASCPA and ICAA becoming AcSB
1980’s – Accounting bodies seek the support from the Federal government to enforce the accounting standards....
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