This chapter presents the following content: The accounting environment, the SEC and the standard-setting environment, rules-based versus principles-based accounting standards, financial accounting standards board, FASB strives to simplify standards, content of authorities,. | Chapter 3 The Environment of Accounting Research 1 The accounting environment Accounting standards are influenced by: Federal bodies Tax laws Specialized industries Inconsistencies in practice Disagreements among constituents Professional organizations International influences Litigation concerns Public concerns 2 The Securities and Exchange Commission (SEC) Established by the Securities and Exchange Act of 1934 Ensure public companies fully and fairly disclose all material facts SEC has statutory authority to issue rules and regulation SEC’s Office of the Chief Accountant (OCA) establishes accounting policies followed by the SEC and is divided into three groups. Accounting Professional Practice International Affairs 3 The SEC - continued Five SEC divisions consulted by the OCA groups: Corporate finance Trading and markets Enforcement Investment management Risk, Strategy, and Financial Innovation 4 The SEC - continued SEC delegated accounting standard setting to the FASB, but has an oversight function SEC rules and regulations Definitions Regulations – compilations of rules – solicitation of proxies Procedural matters- proceedings The Financial Accounting Standards Board (FASB) Develop high quality financial reporting standards (GAAP) Many entities involved: Financial Accounting Foundation (FAF) FASB – members from CPA firms, corporations, academia, and industry. FASB staff- approximately 70 professionals with various backgrounds. Emerging Issue Task Force (EITF) Financial Accounting Standards Advisory Council (FASAC) – guides FASB on which projects to pursue and on task forces to be organized 6 The FASB - continued Pronouncements: Statement of Financial Accounting Standards (SFAS’s) A summary, a table of contents, introduction, the standard, the list of members voting, basis for decision or dissention, appendices. Interpretations of Financial Accounting Standards – interpret SFAS’s and AICPA Accounting Research Bulletins (ARB’s) and APB Opinions. 7 The FASB- . | Chapter 3 The Environment of Accounting Research 1 The accounting environment Accounting standards are influenced by: Federal bodies Tax laws Specialized industries Inconsistencies in practice Disagreements among constituents Professional organizations International influences Litigation concerns Public concerns 2 The Securities and Exchange Commission (SEC) Established by the Securities and Exchange Act of 1934 Ensure public companies fully and fairly disclose all material facts SEC has statutory authority to issue rules and regulation SEC’s Office of the Chief Accountant (OCA) establishes accounting policies followed by the SEC and is divided into three groups. Accounting Professional Practice International Affairs 3 The SEC - continued Five SEC divisions consulted by the OCA groups: Corporate finance Trading and markets Enforcement Investment management Risk, Strategy, and Financial Innovation 4 The SEC - continued SEC delegated accounting standard setting to the FASB, but has an .
