Running head: TEAM D CASE STUDY ASSIGMENTS 1
Case 1-3 Politicization of Accounting Standards:
The creation and formation of these committees and boards were due to the
demanding needs for consistency in an economy, which is regulated within a capitalistic market.
Since business organizations evolved from a simplistic structure to corporations that involve
many ways of investing business capital, there was an immediate need for a mandate to govern
on how to report financial statements. In addition, the formations of these entities were to
establish standards and not “politicalized” the accounting field. Another reason that these
standards were established was “to safeguard shareholders against improper actions by corporate
officers” (Schroeder, Clark, & Cathey, 2011).
By creating and establishing standards initialized by this these boards and committees,
the accounting profession became organized and institutionalized. Training for this field was no
longer just accomplished through apprenticeship but through education on colleges and
universities. By educating the accountants during that period, it also developed a structure on
how to identify corporate abuses and how this could be resolved. Accounting principles and
practices became major subject matters on the formulation of CAP, APB, and FASB. One of the
results on these efforts was the establishment of SEC to administer and authorize financial
accounting practices and reporting standards.
However, a disadvantage that is evident is the implementation of numerous accounting
standards. The standards imposed will not apply as a whole on small businesses’ financial
reporting requirements and could not provide a benefit to an organization. There have been many
criticisms on this aspect of standards overload and was only addressed” in 2009 by IASB by
TEAM D CASE STUDY ASSIGMENTS 2
issuing a pronouncement that simplifies the applicability of disclosure requirements for small
and medium sized businesses” (Schroeder, Clark, & Cathey, 2011).
Case 1-4 Generally Accepted Accounting Principles
In the accounting principles it is understood that rules are followed and are in
accordance with procedures. The managers’ financial statements must comply with such
conventional methods in order to be able to result in a report that states it is in conformity. This
means no deficiencies were present when the examination was conducted by the auditors’
because if deficiencies were present the report would have to be modified and communicate such
problems. Under the principles the quality of information should be consistent, accurate and
comparable. There must be consistency including the matching principle, in which revenues and
expenses are recorded when occurred, to the historical or original cost. Principles include
