Lobbying on Standard Setting in Accounting Assignment

Lobbying on Standard Setting in Accounting - Assignment Example The present paper has identified that the chairman of SEC is selected through political appointment by the federal government. Thus, it is less likely that chairman would not be influenced by the activities of lobbying in the field of setting accounting standards. The lobbying activities in the field of accounting standard setting is directed at influencing the FASB in providing more flexibility to the firm in their accounting practice with no attention towards the safeguarding the long term interests of the firm as well as the investors (Andre, Cazavan-Jeny, Dick, Richard and Walton, 2009, p.24). The intentions of the lobbies are guided by narrow interests of enhancing short term economic value of the firm by allowing relaxations in the accounting standards which are contradictory to the rules and regulations prescribed by FASB. The process of standard setting in accounting is guided by the rules and regulation of Financial Accounting Standards Board (FASB). The process of standard setting in accounting is guided by the rules and regulation of Financial Accounting Standards Board (FASB). The issues involved in the process of standard setting in accounting bring to light the influence of politics and activities of lobbying on setting the standards for accounting (Ball and Foster, 1982, p.165). The activities of lobbying in the setting of standards in accounting explains that politics and lobbying have a direct influence over the activity of standard setting as in the financial policy framework of the organizations. The lobbying activities include purposeful intervention with an aim to manipulate the setting of accounting standards with the help of economic activities so that the economic value added to the company could be enhanced (Beresford 1, 1997, p.90). This is, however, viewed to be inconsistent in accordance with the guidelines of the Financial Accounting Standards Board (FASB). The activities of lobbying is aimed at derailing the standard setters from t he achieving the objectives as set by the Financial Accounting Standards Board though reporting of consistent financial statements. FASB recommends improvement of transparency in accounting by setting the standards on accounting procedure and providing flexibility in the process of reporting financial statement and accounts. The issues related to lobbying on standard setting in accounting arise when the Congress is influenced by the politically influential constituents which are misdirected to achieve self motivated interests (Beresford 2, 2001, p.85). The lobbying by the accounting firms in the process of standard setting could also lead to improve of accounting standards being set by their clients. This is achieved by addressing the areas of ambiguity in the accounting rules prescribed by Financial Accounting Standards Board. The various issues in case of lobbying in the area of setting accounting standards highlight the interests of the companies to reduce costs and attain flexib ility in financial reporting (Bertomeu and Cheynel, 2013, p.814). For example, the accounting standards set by FASB requires the company account to be reviewed on a periodic basis by the auditors.