Question

11 What issue caused a major problem for the APB early in its tenure? What aspect of that issue was most troublesome?

Answer 1

The APB was dissolved hopeing that the smaller, fully independent FASB could more effectively create accounting standards. The ABP was unable to operate completely independently of the U.S. government.

The APB was charged with lack of productivity and failing to act promptly to correct alleged accounting abuses. The APB also met a lot of industry and firm opposition and occasional governmental interference when tackling numerous accounting issues. Thus, fearing governmental rule-making, the accounting professionals investigated the ineffectiveness of the APB and then replaced it with the FASB.

The demise of the APB occurred primarily because the purposes for which it was created were not being accomplished. Generally accepted accounting principles were not being developed. The committee somewhere became a simple extension of the original CAP in that only very specific problem areas were being addressed.