Accounting standard setting and the adherence to these standards is a crucial foundation of the modern business world. These standards are required for the purpose of good quality financial reporting which is useful in communicating economic information regarding companies to the stakeholders involved which includes the shareholders, the potential investors, government, creditors, the general public and many more. Since the financial reporting provides a look into the way the business has been handled, it allows the stakeholders to gauge the stewardship of the managers and undertake a variety of decisions based on the information at hand. Therefore, there is reason for this information represented in the statements to be manipulated which is why it needs to be of a good and reliable quality which is what accounting standards seek to assure. According to Tutticci et al., (1994)
The setting of accounting standards involves the restriction of the behaviour of financial statement preparers. Any restriction of accounting choice may have economic and social consequences, owing to involved wealth redistributions between interested parties. Such competing interests are reflected by the politicization of the accounting standard-setting process and suggest the existence of power, influence and conflict. …..any description of the political process of accounting standard setting should include a consideration of how, when and by whom power was exercised.
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