Question 13Q - Intermediate Accounting (Kieso)

Question

In what ways it felt that the pronouncements issued by the Financial Accounting Standards Board would carry greater weight than the opinions issued by the Accounting Principles Board?

Step-by-Step Solution

Answer

Ways that certify that the opinions of the Financial Accounting Standards Board would carry greater weight than those of the Accounting Principles Board are:

The number of persons, way of remuneration, autonomy, independence as well as representation.

Meaning of Financial Accounting Standards Board

The Financial Accounting Standards Board is an independent non-profit organization. Its purpose is to create accounting and financial reporting standards for firms and non-profit organizations in the United States, in accordance with the generally accepted accounting principles.

Ways by which it felt that the pronouncements issued by Financial Accounting Standards Board would carry greater weight.

• Financial Accounting Standards Boards had 7 members, while Accounting Principles Board had 18 members.

 

• Members of the Financial Accounting Standards Board were paid on a full-time basis and were appointed for a tenure of 5 years, while, the members of the Accounting Principles Board were paid for their part-time work. 
• Financial Accounting Standards Board were appointed by and answerable only to the Financial Accounting Foundation. Accounting Principles Board is the senior committee of the AICPA while Financial Accounting is not engaged in any professional firm.

 

• Financial Accounting Standards Board must split their relations with their private positions while Accounting Principles Board did not do so.

 

• Accounting Principles Board were supposed to be Certified Public Accountants and the members of American Institute of Certified Public Accountants while Financial Accounting Standards Board members do not.