Money related Accounting and Accounting Standards .


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Financial Accounting and Accounting Standards. Objectives of the Chapters. 1. Understand the need to develop accounting standards. 2. Study the development of accounting standards from a historical perspective. 3. The GAAP and the FASB Accounting Standards Codification.
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Money related Accounting and Accounting Standards

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Objectives of the Chapters 1. Comprehend the need to create bookkeeping measures. 2. Study the improvement of bookkeeping guidelines from a recorded point of view. 3. The GAAP and the FASB Accounting Standards Codification. 4. Study the part of the AICPA and the SEC in creating GAAP. 5. Present the bookkeeping standard setting process. Environment and Theoretical Structure of Financial Accounting

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Objectives of the Chapters (contd.) 6. Study the relationship between the adjustments in the financial environment and the improvement of bookkeeping benchmarks. 7. Comprehend the financial outcome of bookkeeping measures. 8. Comprehend the bookkeeping standard consistence framework in the U.S. Environment and Theoretical Structure of Financial Accounting

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Objectives of the Chapters (contd.) 9. Talk about money related reporting change and the Sarbanes and Oxley Act (t he Public Company Accounting Reform and Investor Protection Act of 2002 ) 10. Study the requirement for worldwide bookkeeping guidelines and the merging of the U.S. bookkeeping norms with the International Accounting Standards. Environment and Theoretical Structure of Financial Accounting

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Financial Reporting: An Introduction and Historical Development 1. What is representing? 2. How do we impart budgetary data? Instruments: Four budgetary proclamations. 3. How would we get ready money related articulations? Distinguish, measure and record business exchanges for business substances. Diary sections, presenting on record accounts, work sheet (counting changes… ), F/S,… 4. Why do we require bookkeeping principles? Environment and Theoretical Structure of Financial Accounting

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Accounting Standards Accounting strategies with generous legitimate backing to be utilized by business elements as a part of get ready outer reports for clients. Environment and Theoretical Structure of Financial Accounting

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Issues Related to Accounting Standards 1. Who are the powers to set these measures (Generally Accepted Accounting Principles, GAAP)? 2. What are these principles? 3. The part of the AICPA and the SEC in creating GAAP. 4. The bookkeeping standard setting procedure of the FASB. Environment and Theoretical Structure of Financial Accounting

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1934 Congress SEC Regulation S-X ASR and FRR Staff Accounting Bulletins 1938 Accounting Profession AICPA 1938-1959 CAP … ARBs (51) 1959-1973 APB … APB Opinions (31) 1973 FASB … . 1. Explanation of Financial Accounting Standards 2. Translations 3. Ideas of Financial Accounting 4. Method Bulletins/Staff P. 5. Explanations issued by EITF Year Authority Official Release Environment and Theoretical Structure of Financial Accounting 8

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Pronouncements of the FASB 1. Articulation of Financial Accounting Standards (SFAS) 2. Translations 3. Articulations of EITF (Emerging Issue Task Force) 4. Procedure Bulletins/Staff Positions 5. Articulations of Financial Accounting Concepts Environment and Theoretical Structure of Financial Accounting

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GAAP (General Accepted Accounting Principles) Accounting techniques having "significant legitimate backing" and utilized by business elements as a part of get ready monetary proclamations. Environment and Theoretical Structure of Financial Accounting

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GAAP (contd.) Including: 1. FASB explanations (1973 - Present) 2. FASB Interpretations ( 1973 - Present) 3. APB Opinions (1959 - 1973) 4. APB Interpretations (1959 - 1973) 5. Top ARBs (1938 - 1959) 6. Other Authoritative Pronouncements (i.e., ASR & FRR of the SEC, Technique Bulletins/Staff Positions, and Staff Acct. Notices of the SEC, Statements of EITF, and so on.) Environment and Theoretical Structure of Financial Accounting

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FASB Accounting Standards Codification (ASC) ( Source: SFAS 168) Effective July 1, 2009, FASB Accounting Standards Codification turned into the single wellspring of legitimate, nongovernmental US GAAP. The declarations of the SEC are likewise wellsprings of definitive GAAP for SEC registrants . All other non-grandfathered, non-SEC bookkeeping writing excluded in the Codification will be non-definitive. Environment and Theoretical Structure of Financial Accounting

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FASB Codification (Contd.) The Codification does not change GAAP but rather just the way the current bookkeeping principles are composed. Codification Research System (CRS ). is an online database created by the FASB to permit clients to get to the Codification (and accordingly, definitive GAAP) on the web. CRS utilizes a numerical file framework as a part of which numerical numbers are utilized to compare with subjects, subtopics, areas and sections. . Environment and Theoretical Structure of Financial Accounting

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FASB Codification (Contd.) Example (source: p14 of reading material) Search GAAP for credits and exchange receivables not held available to be purchased consequent to beginning estimation: Topic: FASB ASC 310 ( Receivable point) Subtopics: ASC 310-10 (for Overall subtopic of the Topic 310) Sections: ASC 310-10-35 (to get to the Subsequent Measurement Section of the subtopic 310-10) Paragraph: ASC 310-10-35-47 (to survey the Loans and Trade Rece. Not Held available to be purchased Para.) Environment and Theoretical Structure of Financial Accounting

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The Role of the AICPA On Standard Setting 1939 - 1959 CAP ARBs 1959 - 1973 APB Opinions 1973 - Present 1. Issue Papers (by AcSEC) a 2. Articulations of Position 3. Rehearse Bulletins 4. Reviewing Standards (by the Auditing Standards Board) a. The Accounting Standards Executive Committee which was set up inside the Accounting Standard Division of the AICPA. Environment and Theoretical Structure of Financial Accounting

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The Accounting Standard Setting Process of the FASB (A Due Process) Identify a subject and place it on the Board\'s plan. Structure a team to characterize issues and issues identified with the point. A "dialog reminder" (DM, an unbiased examination of issues) is drafted by the FASB\'s specialized staff in counseling with a gathering of information individuals in bookkeeping and business group. Environment and Theoretical Structure of Financial Accounting

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The Accounting Standard Setting Process of the FASB (contd.) An open listening to held 60 days after the arrival of DM. The Board assesses the general population reaction, gets ready and discharges a presentation draft (ED). The "ED" is presented to the general population for no less than 30 days for open remarks. An advisory group examines the general population commenst and overhaul the ED if important. Voted by 5 individuals from the Board. The section of another FASB proclamation requires 3 votes. Environment and Theoretical Structure of Financial Accounting

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Other Issues Related to Accounting Standards 1. Changes of the monetary environment and the advancement of bookkeeping models. 2. The financial outcome of bookkeeping norms. 3. The bookkeeping standard consistence framework in the U.S. what\'s more, the interrelationship of the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB). Environment and Theoretical Structure of Financial Accounting

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Changes of the Economic Environment and the Development of Accounting Standards. Case: SFAS No. 13 (Accounting for Leases) SFAS No. 33 and 89 (Financial Reporting and evolving costs) SFAS No. 52 (Foreign Currency Translation) SFAS No. 123 (Accounting for Stock-Based Compensation) Environment and Theoretical Structure of Financial Accounting

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Economic Consequence of Accounting Standards Examples: SFAS No. 106 (Employers\' representing post-retirement benefits other than annuities.) SFAS No. 115 (Accounting for specific interests in the red and value securities.) Environment and Theoretical Structure of Financial Accounting

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The Accounting Standard Compliance System The interrelationship of the SEC and the FASB: FASB: the tenet making body. SEC: the upholding organization. Environment and Theoretical Structure of Financial Accounting

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The Financial Reporting Reform and the Sarbanes and Oxley Act The breakdown of Enron, the dissolving of Arthur Andersen and the bookkeeping outrages of some prominent firms (WorldCom, Xerox, Global Crossing, and so forth.) extremely harmed open trust in the bookkeeping calling and the money related reporting. At the interest of people in general, Sarbanes and Oxley Act was passed to reestablish the general population trust in the believability of the money related reports. Environment and Theoretical Structure of Financial Accounting

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The Financial Reporting Reform and the Sarbanes and Oxley Act (Cont.) Key Provisions of the Act including: Creating the Oversight board: build up evaluating gauges (i.e., auditing,quality control, morals, freedom for the readiness of the review report. Expanding Corporate Executive Accountability: they should by and by confirm both the budgetary articulations and revelations) Prohibition of Non-Audit Services ( I.e., accounting, inside review, examination, and other counseling administrations) Environment and Theoretical Structure of Financial Accounting

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The Financial Reporting Reform and the Sarbanes and Oxley Act (Cont.) Retention of work Papers for a long time. Examiner Rotation. Irreconcilable situation. Enlisting of Auditor: by the review council of the leading body of directors,not the administration. Assessment of Internal Control: the administration needs to archive and survey the adequacy of inside control. Inspectors of the firm need to state:1)whether the administration\'s evaluation is reasonable, and 2)whether the inner control of the firm is powerful. Environment and Theoretical Structure of Financial Accounting

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The Need for International Accounting Standards Companies working together in more than one countries found that it is difficult to conform to more than one

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