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Part 2: 1973-2004
Controvertial Standards Triggers Special-Interest Lobbying
This article, the second of a two-part commentary about accounting standards setting, chronicles the rising importance of financial accounting standards in different sectors of the U.S. economy, which has led to increasing special-interest lobbying for accounting standards with characteristics compatible with the desired outcomes. Financial accounting standards affect the U.S. economy in many ways, both in the aggregate and in the distribution of income, wealth, and risk. This commentary captures many of the key issues that have preoccupied standards setters, and especially identifies the efforts of the Financial Accounting Standards Board to implement an asset-and-liability approach to recognition and a fair-value approach to measurement.
1973
The Financial Accounting Standards Board (FASB) succeeds the Accounting Principles Board (APB) on July 1, 1973, two days after the International Accounting Standards Committee (IASC) is formed. In 1969 and 1970, the Accounting Standards Steering Committee had been established in the United Kingdom and Ireland, replacing the program of the Institute of Chartered Accountants in England and Wales for issuing Recommendations on Accounting Principles.
Comment. In the early 1970s, the phrase "setting accounting standards" replaced "establishing accounting principles." The term "standards setter" came into vogue.
1973
Within the AICPA, the Accounting Standards Executive Committee (AcSEC), composed entirely of accounting practitioners, succeeds the APB. It issues Statements of Position (SOP) on accounting practices in specific industries.
Comment. This was the last preserve of the AICPA in the area of accounting standards setting, but the scope of this activity was narrow and Statements of Position were later subject to FASB approval before they could take effect. In 2002, FASB announces that, after a transition period, this work of AcSEC will be phased out.
1973
In Accounting Series Release 150, the SEC announces that it will look to FASB for leadership in setting accounting standards.
Comment. This was the SEC's first formal statement of support for a private-sector body setting accounting standards (or establishing accounting principles). Chief Accountant John C. (Sandy) Burton wanted the SEC to give FASB its full backing.
1973
The Trueblood Study Group, created by the AICPA in 1971, issues a booklet, Objectives of Financial Statements, which advocates a "decision usefulness" approach to the development of accounting standards.
Comment. This was...