Question

What are the sources of pressure that change and influence the development of GAAP?

I know this is a broad question. I believe it would be organizations like the SEC, FASB, or AICPA that influence GAAP's development. I just wanted to hear an experts take on the answer. I really appreciate if the answer can be as detailed and specific as possible. Thanks!

Answer 1

Some of the sources of pressure for changes in GAAP are:

• Individual companies: Some big companies and influential persons tend to influence the changes as per their convinience. Though not from front, but the back door deals in name of political funding happen.
• Industry associations: Specific industry associations like of industry of cotton exporters etc. acting as representative of all the companies in the industry may also influence the GAAP changes to address the complications they face in their accounting treatments.
• Government agencies like SEC also give their inputs while framing GAAP. SEC propose changes based upon their experience in regulating the companies and how they believe that changes will better serve the stakeholders
• Practicing Accountants through their associations like AICPA also lobby for the changes to help better presentation of financial stateemnts .
• Academecians give their inputs based upon study of the effect of the current GAAP and how the change in GAAP will lead to alter in the situation. Some changes have wide spread negative effect over the society as companies find the tweek in the change, academecians like professors of the university through their journals may give their opinion

Hope this helps !!