1. Accounting Standard Setting: Developing Generally Accepted Accounting Principles (GAAP) for preparing financial statements & related disclosures pre 1929:CPA’s used their professional judgments to determine appropriate accounting procedures (result: multiple sets of GAAP)pre 1929:CPA’s used their professional judgments to determine appropriate accounting procedures (result: multiple sets of GAAP) Oct. 1929:Stock Market Crash (overly optimistic investors) (confidence in our securities markets diminished) 1933, 34:Securities & Exchange Commission1933, 34:Securities & Exchange Commission 1936:Comm. on Accounting Procedures (AICPA): “may”1936:Comm. on Accounting Procedures (AICPA): “may” 1959:Accounting Principles Board (AICPA): “should”1959:Accounting Principles Board (AICPA): “should” 1973:Financial Accounting Standards Board: “shall” providing “substantial authoritative support”1973:Financial Accounting Standards Board: “shall” providing “substantial authoritative support”--------------------------------------------------------------------------------------

2. How FASB standards are created project is placed on the agendaproject is placed on the agenda a task force of experts defines specific problems & alternativesa task force of experts defines specific problems & alternatives the FASB technical staff conducts research & analysisthe FASB technical staff conducts research & analysis a discussion memorandum is drafted & releaseda discussion memorandum is drafted & released a public hearing is held (at least 60 days after the discussion memo is released)a public hearing is held (at least 60 days after the discussion memo is released) the public response is evaluatedthe public response is evaluated FASB deliberates on various issues & prepares an exposure draft of a proposed Statement of Financial Accounting Standards (SFAS)FASB deliberates on various issues & prepares an exposure draft of a proposed Statement of Financial Accounting Standards (SFAS) the exposure draft is releasedthe exposure draft is released there is at least a 30-day waiting period for public commentsthere is at least a 30-day waiting period for public comments all letters & comments are evaluatedall letters & comments are evaluated the FASB revises the draft if necessarythe FASB revises the draft if necessary the entire FASB gives final consideration to the draftthe entire FASB gives final consideration to the draft the FASB votes on the issuance of the statement.the FASB votes on the issuance of the statement.

3. House of GAAP AICPA Accounting Interpretations FASB Implementation Guides Widely recognized & prevalent Industry practices LeastAuthoritative FASB Standards & Interpretations APB Opinions AICPA CAP’s Accounting Research Bulletins FASB Technical Bulletins AICPA Industry Audit & Accounting Guides AICPA Statements of Position FASB Emerging Issues Task Force AICPA Accounting Standards Executive Committee Practice Bulletins MostAuthoritative Generally Accepted Accounting Principles