In this post, we will learn in detail about the Top 7 Organizations that Influencing Accounting Principles, and much more.
What are the top 7 Organizations that Influencing Accounting Principles?
Several organizations are directly and indirectly playing a role in determining, modifying, enhancing, and refining accounting principles.
Seven of these organizations that influencing accounting principles are:
- Financial Accounting Standard Board-FASB
- American Institute of Certified Public Accountants-AICPA
- Accounting Principles Board-APB
- Securities and Exchange Commission-SEC
- American Accounting Association-AAA
- International Accounting Standards Committee-IASC
- International Accounting Standards Board-IASB
Now we’re attempting to learn more about these organizations:
Financial Accounting Standard Board-FASB
The Financial Accounting Standards Board is one of the most important institutions determining the Universally Accepted Accounting Principles (GAAP).
It was established in 1983. It is an independent organization based in the United States.
The Financial Accounting Foundation manages FASB. It has seven members.
The Financial Accounting Foundation appoints the members. Board members are not involved with any other organization.
The Financial Accounting Standards Board was born to issue and develop accounting policy in practice. The FASB issues financial accounting standards.
The FASB first provides guidelines for accounting for business transactions. It is referred to as the Statement of “Financial Accounting Standards.” This statement later became known as the Universally Accepted Accounting Principles (GAAP).
It is complied with by all parties involved in the business. It means that the accounts of an organization prepared following the standards issued by the FASB are accurate.
The main source of FASB’s power is the U.S. Congress, the U.S. government-controlled Securities and Exchange Commission (SEC). They assist the FASB in formulating accounting principles. The final declaration of the FASB is called Generally Accepted Accounting Principles (GAAP).
American Institute of Certified Public Accountants-AICPA
The American Institute of Certified Public Accountants (AICPA) is a professional association of Certified Public Accountants.
Before creating the FASB, the American Institute of Certified Public Accountants (AICPA) Committee was responsible for formulating Universally Accepted Accounting Principles (GAAP).
AICPA effectively participates in various aspects of accounting. For example, they create a code of professional conduct that its members follow.
A committee of the AICPA also develops professional audit standards that certified public accountants follow in auditing financial statements.
AICPA also researches accounting with FASB in developing accounting principles.
Accounting Principles Board-APB
The American Institute of Certified Public Accountants formed an 18-member board in 1959 called the Accounting Principles Board (APB).
The American Institute of Certified Public Accountants empowers this Board to express its views on universally accepted accounting principles.
From 1962 to 1973, the Board published 31 opinions. In early 1964, the AICPA took these views seriously enough and issued a rule that a footnote must be attached to the company’s published financial statements.
The Accounting Principles Board will examine these financial statements and see if this statement deviates from universally accepted accounting principles.
Securities Exchange Commission-SEC
The Securities and Exchange Commission (SEC) was established by the Securities and Exchange Act of 1934 in the United States.
The Securities and Exchange Commission is a federal body in the United States with the legal authority to set and enforce accounting rules for corporations that sell securities to the general public.
This commission is crucial in the submission of financial reports. The Securities and Exchange Commission establishes a set of guidelines for generating financial reports following accounting policies.
The accountants must follow these criteria when preparing the financial report.
The Securities and Exchange Commission may take legal action against a company and the person responsible if they fail to follow the requirements when generating financial statements.
American Accounting Association-AAA
The American Accounting Association (AAA) was formed in 1936. The American Accounting Association is an organization that teaches professional accounting.
This organization has an indirect and long-term influence in determining accounting policy.
Members of this Association conduct theoretical research in addition to the practical aspects of accounting.
The American Accounting Association continues to look for solutions to accounting problems.
The American Accounting Association (AAA) represents many research lessons to express their views on accounting principles and publishes many publications on accounting principles.
International Accounting Standards Committee (IASC)
The International Accounting Standards Committee (IASC) was established in 1973 in the United Kingdom.
Members represent 18 accounting bodies from nine nations to update the global accounting system and financial statements. The main office is in London.
International accounting standards are the standards that this organization publishes every year covering the application and policy of accounting.
This organization’s major duty is to develop standard international policies for the preparation of financial statements and to publish them in the form of statements.
To that purpose, draft proposals are invited from various parties, and they are published for comments.
After considering them, the policies are approved and published in the form of statements.
International Accounting Standards Board-IASB
As a successor to the International Accounting Standards Committee, the International Accounting Standards Board was established in 2001. On April 1, 2001, the Board took responsibility.
The International Accounting Board is in charge of national and international accounting development, implementation, and supervision.
Since the founding of the International Accounting Board, the International Accounting Standard Committee has not released any accounting standards.
Accounts standards are issued by the International Accounting Standards Board (IASB). Currently, the standards issued by the International Board of Accountants are called the International Financial Reporting Standards (IFRS).
The standard of accounting issued by the IASB is a groundbreaking step in accounting to eliminate inequalities and equilibrium in the preparation of financial statements in different countries.
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