Question

Case 2-2 The Theoretical Foundation of Accounting Principles

During the past several years, the FASB has attempted to strengthen the theoretical foundation for the development of accounting principles. Two of the most important results of this attempt are the Conceptual Framework Project and the Emerging Issues Task Force. During this same period, the FASB has been criticized for imposing too many standards on the financial reporting process, the standards-overload problem.

Required:

a.Discuss the goals and objectives of

i.The Conceptual Framework Project

ii.The Emerging Issues Task Force

b.Discuss the standards overload problem.

Answer in your own words please.

Answer 1

a.

1. The FASB standards should be in a concise and proper manner based on GAAP standards is the main goal of the Conceptual Framework Project. The continuing development of the Conceptual Framework Project is a project jointly undertaken by both the IASB and the FASB.

2. The EITF or Emerging Issues Task Force was formed in 1984 with the primary goal of providing assistance in prompt financial reporting. Public meetings are held by the task force to discuss and resolve any accounting issues with financial professions. Identifying and finding a uniform way to solve the issues is one main function of the EITF.

b.

The standards overload problem is basically just describing what some feel is an extreme amount complex rules and regulations that must be followed by accountants and businesses. The FASB board is working to simplify the complexity with various projects. One project is attempting write the rules and regulations in a more simple, clear manner, hoping to lose much of the complexity. The disclosure overload is being addressed too in an attempt to simplify the financial disclosures to make financial statements easier to understand. A third project is the continuation of the codification project, increasing the amount of information that is available.