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Return to Blackboard Helo I System Announcements Grace Period: 2 days left I Re CALCURATOR PKINTER VERSION BACK NEXT Concept for Analysis 1-8 (Essay) One of the major groups that has been involved in the standard-setting process is the American Institute of Certified Public Accountants. Initially, it was the primary organization that established accounting principles in the United States. Subsequently, it relinquished its power to the FASB. Identify the two committees of the AICPA that established accounting principles prior to the establishment of the FASB Speculate as to why these two organcations it tyurswer, identity steps the FASB has taken to avoid failure What is the present role of the AICPA in the rue making evronment Click if you would like to Show Work for this question

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(a) Identify the two committees of the AICPA that established accounting principles prior to the establishment of the FASB.
-Committee on Accounting Procedures (CAP): from 1939 to 1959, issued 51 Accounting Research Bulletins (ARB).
- Accounting Principles Board (APB) : (1959) to replace the CAP. Before being replaced by the FASB, the APB released 31 official pronouncements, called APB Opinions.

(b) Speculate as to why these two organizations failed. In your answer, identify steps that FASB has taken to avoid failure.
On of the main problems with the CAP is that the CAP’s problem-by-problem approach failed to provide the well-defined, structured body of accounting principles that was both needed and desired. As a result, the CAP was replaced by the APB.The APB had more authority and responsibility than did the CAP; however, it came under fire early, charged with lack of produc¬tivity and failing to act promptly to correct alleged accounting abuses. The APB also met a lot of industry and CPA firm opposition and occasional governmental interference when tackling numerous thorny accounting issues. In fear of governmental rule making, the accounting profession investigated the ineffectiveness of the APB and replaced it with the FASB. Learning from prior experiences, the FASB has several significant differences from the APB. The FASB has: (1) smaller membership, (2) full-time, compensated membership, (3) greater autonomy, (4) increased independence, and (5) broader representation. In addition, the FASB has its own research staff and relies on the expertise of various task force groups formed for various projects. In addition, the due process taken by the FASB in establishing financial accounting standards gives interested persons ample opportunity to make their views known. Therefore, the FASB is responsive to the needs and viewpoints of the entire economic community, not just the public accounting profession.

(c) What is the present role of the AICPA in the rule-making environment?
The AICPA has supplemented the FASB’s efforts in the present standard-setting environment. The issue papers, which are prepared by the Accounting Standards Executive Committee (AcSEC), identify current financial reporting problems for specific industries and present alternative treatments of the issue. These papers provide the FASB with an early warning device to insure timely issuance of FASB standards, Interpretations, and Staff Positions. In situations where the FASB avoids the subject of an issue paper, AcSEC may issue a Statement of Position to provide guidance for the reporting issue. AcSEC also issues Practice Bulletins which indicate how the AICPA believes a given transaction should be reported. Recently, the role of the AICPA in standard-setting has diminished. The FASB and the AICPA agreed, that after a transition period, the AICPA and AcSEC no longer will issue authoritative accounting guidance for public companies.

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