Financial Daily from THE HINDU group of publications
Thursday, Nov 14, 2002
Financial Daily from THE HINDU group of publications Thursday, Nov 14, 2002 |
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Opinion
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Accountancy Columns - Account Speak Fewer cooks
WHEN there is a traffic jam, it is necessary to move long-parked vehicles. Likewise, when there are too many new players, pressure builds on veterans in the field to call it quits. Accounting rulemaking in the US has faced a similar situation and the American Institute of Certified Public Accountants (AICPA) has announced that its Accounting Standards Executive Committee (AcSEC) will stop issuing general purpose accounting "statements of position" (SOP) and concentrate instead on industry-specific accounting and auditing guidance. The sombre news came through the Financial Accounting Standards Board (FASB) Chairman, Mr Robert Herz. AcSEC will cease issuing statements that create GAAP (generally accepted accounting principles), he said, though the lay could interpret that it is always good for gap-creators to go. According to Mr Herz, the prevailing rule-making process was no different from a "four-legged stool". GAAP had as its limbs what was said by FASB, its Emerging Issues Task Force (EITF), AcSEC and the Securities and Exchange Commission (SEC). With one leg off, there would be fewer cooks to make the broth, or fewer books to cause the froth. One would have to ask physicists whether a three-legged stool is better than the four-type, but it would be difficult for Mr Herz to stretch the stool analogy when the number dwindles to two, at which time, crutches would be more appropriate, and at one the ideal comparison would be the witch's broom. The new role for AICPA, the US counterpart of our own ICAI, is curtailed to working on industry-specific accounting and audit (A&A) guides, and writing comment letters to the FASB and the IASB on new standards. The new goal is to work on principles-based standards, rather than the rule-based confusion that prevailed all along. "AcSEC and related task forces continue to attract volunteers who are the best of the profession and hold service to the public interest in the highest regard," declares AICPA's press note signing off sportsmanlike. Will the ICAI meet a similar fate?
D. Murali
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