Financial Reporting Problem
Beverly Crusher, a new staff accountant, is confused because of the complexities involving accounting standard-setting. Specifically, she is confused by the number of bodies issuing financial reporting standards of one kind or another and the level of authoritative support that can be attached to these reporting standards. Beverly decides that she must review the environment in which accounting standards are set, if she is to increase her understanding of the accounting profession. Beverly recalls that during her accounting education there was a chapter or two regarding the environment of financial accounting and the development of GAAP. However, she remembers that her instructor placed little emphasis on these chapters.
(a) Help Beverly by identifying key organizations involved in accounting rule-making.
(b) Beverly asks for guidance regarding authoritative support. Please assist her by explaining what is meant by authoritative support.
(c) Give Beverly a historical overview of how rule-making has evolved so that she will not feel that she is the only one to be confused.
(d) What authority for compliance with GAAP has existed throughout the history of rule-making?