Some accountants have said that politicalization in the development andacceptance of generally accepted accounting principles (i.e., standard setting) istaking place. Some use the term politicalization in a narrow sense to mean theinfl uence by governmental agencies, particularly the SEC, on the development ofgenerally accepted accounting principles. Others use it more broadly to mean thecompromising that takes place in bodies responsible for developing these principlesbecause of the infl uence and pressure of interested groups (SEC, AmericanAccounting Association, businesses through their various organizations, Instituteof Management Accountants, fi nancial analysts, bankers, lawyers, etc.).

Requires:

1/The Committee on Accounting Procedure of the AICPA was establishedin the mid- to late 1930s and functioned until 1959, at which time theAccounting Principles Board came into existence. In 1973, the FinancialAccounting Standards Board was formed, and the APB went out ofexistence. Do the reasons these groups were formed, their methods ofCases 27c01Thedevelopmentofaccountingthe27 Page 27 8/5/10 10:13:37 PM user-s146 01Thedevelopmentofaccountingthe27 Page 27 8/5/10 10:13:37 PM user-s146 /Users/user-s146/Desktop/Merry_X-Mas/New Users/user-s146/Desktop/Merry_X-Mas/New28 Chapter 1 The Development of Accounting Theoryoperation while in existence, and the reasons for the demise of the fi rsttwo indicate an increasing politicalization (as the term is used in thebroad sense) of accounting standard setting? Explain your answer byindicating how the CAP, APB, and FASB operated or operate. Cite specifi cdevelopments that tend to support your answer

2/ What arguments can be raised to support the politicalization of accountingstandard setting?

3/What arguments can be raised against the politicalization of accountingstandard setting? (CMA adapted)

Thank you