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groups that impact Accounting rules
Major players, minor players in US GAAP
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Major player -- The Securities and Exchange Commission (SEC)
Main Purpose -- Protect investors, run securities market (NYSE, NASDAQ), facilitate capital raising Legal authority ---to develop accounting rules ,practices for publically traded US corporations Mandated financial statements --based on professional standards & audited, based on US GAAP Private sector versus public sector –FASB in US, IASB for international Enforce rules - Substantial authoritative support for FASB, require audits in compliance with US GAAP Input -persuasion rather than edict Feedback -- proposed standards The public sector group with legal authority in the US to make accounting rules, but more important in that they enforce the rules
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Major Player -- Financial Accounting Standards Board (FASB)
Rule makers - FASB 1973 to present (APB , CAP ) Membership - 7 well paid (funded by FAF), highly educated, intelligent, experienced, ethical, full-time, diverse members Rule making process – ID issues, research, issuing invitation to comment, exposure draft, accounting standard, public input, 4 of 7 pass standard (twice in history 5 of 7) Lots of support – Financial Accounting Standards Advisory Council(FASAC), Emerging Issues task force (EITF), research/technical & administrative staff Accounting Standards Codification (2009) searchable electronic database all US GAAP– 90+ topics (includes 168 FASB standards) Accounting Standards Updates replaces statements of financial accounting standards, interpretations, staff positions, technical bulletins, statements of financial accounting concepts, guide for implementation Private sector rule-making body that SEC usually supports
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Major Player – International Accounting Standards Board (IASB)
Impacts countries, ruling flexibility, applied differently by country Pronouncements - International Financial Reporting Standards (IFRS) from IASB, International Financial Reporting Standards Interpretive Guidance (IFRICs) from IFRS Interpretations Committee Standard process – topic, discussion paper, exposure draft, public input, proposed standard Voting of 16 members, members from various countries Financial support -- IFRS foundation over IASB similar to FAF over FASB Rulings -- IFRS Foundation web site Joint projects - with FASB to develop common standards Older rulings – 41 International Accounting Standards (IASs) Global standard setter
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FASB seeks public input in its standard setting process
Minor Players FASB seeks public input in its standard setting process American Institute of Certified Public Accountants ( AICPA ) American Accounting Association (AAA) Institute of Management Accountants (IMA) Various accounting groups seek input to the standard setting process
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Convergence of FASB and IASB Accounting Standards
Initial SEC time line –bilingual for now, IFRS in , global standards Impact on US of IFRS – good for investors, international companies, negative for--US contracts, less guidance, some radically different, small company/US only company impact, expense, governance- interpret, apply, enforce SEC update in 2012– no timeline, convergence by FASB/IASB joint projects joint projects start in conceptual framework completed, Revenue recognition issued in 2014, exposure draft -- leases, insurance, working on financial instruments
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