Chapter 13

STANDARD SETTING: POLITICAL

ISSUES

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Overview

Perspektif teori ekonomi: pertanyaan tentang

luasnya (extent
(extent)) regulasi akuntansi dan standar
pelaporan mengawatirkan (unsettled
(unsettled))

Walau kita dapt menyarankan sejumlah insentif

kontraktual dan berbasisberbasis-pasar bg produksi inf khusus
(private
private),
),
kita tdk tahu apakah kegagalan pasar yg meningkat
akibat dari deregulasi keputusan produksi inf persh
akan lebih atau kurang mahal kpd masyarakat dp
berbagai biaya proses penyusunan standar

Problema kegagalan pasar adl begitu fundamental

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Overview

Asimetri inf (dan problema yg diakibatkan, moral

hazard--MH dan adverse selectionhazard
selection-AS) yg
menciptakan permintaan unt produksi inf oleh
persh, juga menciptakan permintaan unt
regulasi atas produksi inf itu, hal ini disebabkan:

Problema unanimity
unanimity
jumlah inf yg akan dihasilkan
sendiri persh, dan umumnya tidak akan terjadi, sama
dengan jumlah yang investor inginkan
Akibatnya, investor bisa mendorong regulasi untuk
memperbaiki defisiensi yg dipersepsikan

Penyusunan standar scr fundamental mrp

proses ekonomik yg besarnya sama dengan
proses politik

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Overview

Tujuan chapter ini unt

Membahas dua teori regulasi

Teori kepentingan publik (public

(public interest theory
theoryPIT):
memandang bhw regulasi seharusnya memaksimumkan
kemakmuran sosial
Teori kelompok kepentingan (interest
(interest group theory
theoryIGT):
memandang bhw individu membentuk koalisi/ konstituen untuk
memproteksi dan mempromosikan kepentingannya dg melobi
pemerintah, koalisi dipandang sbg konflik satu dg lainnya untuk
meraih bagian manfaat dari regulasi

Menguji proses penyusunan standar

Mempertimbangkan kriteria yg diperlukan penyusun
standar bahwa standar yg mereka susun akseptabel

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Organisasi Bab 13

Teori
kepentingan
publik

Org badan
akuntansi
profesional

Teori Regulasi

Penys standar:
konflik &
kompromi

Kesimpulan:
aplikasi teori klp
kepentingan

Teori
kelompok
kepentingan

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Teori kepentingan publik

Public Interest theory/PIT

Menyarankan: regulasi adl hasil dari permintaan publik

unt koreksian kegagalan psr
Asumsi: sbg sentral autoritas memiliki kepentingan
terbaik dr masyarakat
Regulasi: pemikiran tentang pertukaran (tradeoff
(tradeoff)) antara
biaya regulasi dan manfaat sosialnya dlm bentuk operasi
pasar yg meningkat

Problema pandangan PIT: kulitnya saja (superficial

(superficial))
& mungkin naif

Tugas sangat kompleks tentang memutuskan atas

jumlah yg benar atas regulasi
Motivasi badan pengatur

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Teori kelompok kepentingan

interest group theory

theoryIGT):
Memandang bhw suatu industri beropersi dlm
keberadaan sjumlah kelompok kepentingan
(konstituen)

E.g, industri pemanufakturan, konstituennya:
konsumen, ahli lingkungan,

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Organisasi Badan Akuntansi Profesional

Kanada--CICA:
Kanada-CICA: The Canadian Institute of
Chartered Accountants
Amerika-Amerika
--AICPA= American Institute of Certified Public Accountants
Indonesia
Indonesia
IAI= Ikatan Akuntansi Indonesia

?????? IAI= Ikatan Arsitektur Indonesia ??????????

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Organisasi Badan Akuntansi Profesional

Kanada--CICA:
Kanada-CICA: The Canadian Institute of
Chartered Accountants

Komite Standar Akuntansi:

AcSB (Accounting Standards Board)

AASB (Auditing and Assurance Standards Board), dan
PSAB (Public Sector Accounting Board)

Hasil kerja komite standar akuntansi= CICA

Handbook, berisi standar unt akuntansi keuangan
dan unt pengauditan, yg diletakan oleh AcSB dan
AASB

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Organisasi Badan Akuntansi Profesional-Kanada

Berbagai tahapan unt menciptakan standar baru

menunjukkan bahwa prosesnya adl kental dg
politis, dg tekanan pd proses akhir (due
(due process)
process)

Banyak dr konstituen akuntansi diundang unt ambil

bagian
Konstituen peran: sbg bagian dari proses yg
menyebabkan penyisipan suatu item ke dlm agenda
badan, maupun sbg anggota badan sendiri, atau sbg
responden unt draf ekspos
Jk proses adl scr ketat ekonomis, perwakilan berbasis
badan tidak perlu slm standar yg benar dpt scr
sederhana dideduksi dr teori

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10

Parties Involved in Standard

Setting--U.S
Setting

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Parties Involved in Standard SettingSettingU.S

AICPA: American Institute of Certified Public

Accountants

CAP--Committee on Accounting Procedure 1939

CAP
1939--1959

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Part--time, volunteer, appointed.

Part

Issued ARBs (Accounting Research Bulletins)

Bulletins) listed on text inside
front cover.

Not thorough or involved enoughenough-piecemeal approach.

No basic theory established.

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Parties Involved in Standard

Setting

APB- Accounting Principles Board 1959

APB1959--1973 Senior Committee of
the AICPA.

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Issued Opinions
Opinions,, listed on text inside front cover.

Formed to settle problems and do research.

More authority than CAP.

18
18--21 members, partpart-time and poorly paid. Challenged early on from
various constituencies.

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Parties Involved in Standard Setting

Wheat Committee formed to address need for coherent approach to

theory and practice. Recommended the formulation of:

FASB-Financial Accounting Standards Board (1973

FASB(1973--present)

Seven highly paid, fullfull-time members from various constituencies

(practice, research, users). 55-year terms.

Independent of AICPA, under the auspices of the Financial

Accounting Foundation (FAF).

The

FAF selects the members of the FASB.

The

FAF oversees the Financial Accounting Standards Advisory

Council (FASAC) which has the responsibility to consult with the
FASB on major policy and technical issues.

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Parties Involved in Standard Setting

FASB has broader representation than CAP or APB.

Member need not be a CPA.

FASB issues:
Standards
Interpretations
Concepts
Technical Bulletins
Industry Guides
Please see figure 1-5 House of
GAAP (text).

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Parties Involved in Standard Setting

DUE PROCESS: To develop standards (GAAP) (page 10, text)

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A topic or project is identified and placed on FASBs agenda.

A task force is assembled to define problems, issues and

alternatives.

Research is conducted by FASB technical staff.

A discussion memorandum is drafted and released.

Public hearings are held in a timely manner.

The FASB committee analyzes and evaluates public response.

The FASB committee deliberates and prepares and exposure

draft..
draft

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Parties Involved in Standard Setting

Again,

public hearings are held in a timely manner,

comments taken.

The

FASB committee evaluates the public comments

and revises the draft as necessary.

The full board of FASB reviews

final draft and, if approved by a
vote of at least 5 of 7, issues a
FASB

Standards Statement.

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FASB: A Look to the Future

Public versus Private regulation of profession. The Accounting Profession

seeks to govern itself directly rather than have the government directly draw
up the GAAP to be followed.

Should Securities and Exchange Commission exercise direct oversight?

Congressional Actions:

Metcalf--MossMetcalf
Moss-Revised due process procedures.

Dingell Committee (1985)(1985)-Standard setting process sufficient.

Trueblood CommitteeCommittee-Set up Accounting Change Commission.

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FASB: A Look to the Future

Standards Overload v. Timely Guidance

Big GAAPGAAP-Complex registrants.

Little GAAPGAAP-Nonregistrants, smaller firms.

Very specialized standards-standards--Too

Too complex or complex issues?

Standard overloadoverload-A quick look at textbook inner covers for dates

demonstrates how numerous and complex new standards have become!

Timely guidanceguidance-Due process too long? If faster will issues be adequately

addressed?

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FASB: A Look to the Future

FASB response:

Set up two sets of standards?: OCBOAOCBOA-Other Comprehensive Basis of

Accounting--problems, comparability, consistency.
Accounting

Increased use of EITFEITF-Emerging Issues Task ForceForce-to prioritize concerns.

Emerging Issues Task Force:

Set up by FAF to advise FASB.

16 members -no user representation!

Prioritizes issues and treatment:

General consensus there is preferable treatmenttreatment-no further study.

No consensus but problem narrownarrow-no further action.

No consensus but agreement important-important--FASB

FASB attention.

Is it usurping the FASBs role?

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FASB: A Look to the Future

Preparer dominance in setting GAAP (resource allocation)?

Vested interest in simplicity and work product.

Reduced SEC involvement lately.

Some wish to change focus of reports from public to management!

Preparers have severely criticized the FASBFASB-not blue ribbon.

To prevent abuse Users should remain active!

Greater SEC involvement; preparers

Members of the
FAF selected
carefully
(independent).

lose most by direct regulation.

Careful selection of FASB

board members.

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Other Important Rulemaking

Bodies

SEC--Securities and Exchange Commission

SEC

First group to draw up professional standards.

1933 Act-Act--Set
Set up commission and governed initial issuance of shares.

1934 Act-Act--Governed
Governed subsequent trading in shares.

Statutory power to govern professionprofession-uses veto power.

Issues :

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FRR (Financial Report Releases)

Regulation SS-X which contains instructions and forms for filing financial
statements.

Decisions on cases coming before the SEC.

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Other Important Rulemaking Bodies

Need for regulation arose chiefly out of the corporate characteristic of the
separation of ownership and control. Regulation of Securities in the U.S.
(federal)

Federal Trade Commission Act (Interstate commerce)

Clayton Act (Interstate commerce)

Early attempts at regulation failedfailed-no big problem yet.

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Other Important Rulemaking Bodies

Regulation of Securities in the U.S. (state)

Kansas 19111911-by 1913 22 states had regulatory lawslaws-blue sky laws.

Not terribly effective.

Abuses in 1920s

Price manipulation wash sales.

Purchase on margin.

Insider trading.

Establishment of the SEC

Charged to ensure full and fair disclosure, concern for fraud and
securities registration.

Accused of selfself-interest and accumulating power-power-- hopefully it serves the

public.

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Other Important Rulemaking Bodies

Growth of SEC

From tentative acceptance SEC has grown and become more involved.

1962--market disruption brought amendments1962

amendments-Exchange Act.

1977-Foreign Corrupt Practices Act1977Act-Criminal penalties possible for

management and accountants; adequacy of internal control.

1984--Insider Trader Sanctions Act1984

Act-increased penalties.

Question still remains as to how effective SEC is in regulating capital markets.

Exercises veto power over accounting profession although vested with

direct authority (as discussed before).

Regulated filings adequate?

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Other Important Rulemaking Bodies

Organizational Structure of SEC:

Office of the Chief Accountant is the most powerful in the United States!

Responsible for administration of laws.

Works with the FASB.
Works with many other organizations (e.g., major stock exchanges).

Enforcement by SEC:

Letter of deficiency used if there are

questions, irregularities that arise in the
financial statements, reports. If the
problems persist, a stop order will
be issued. Criminal charges are possible.

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Other Important Rulemaking Bodies

GASB
GASB--Governmental

Accounting Standards Board

-1984

Under

the auspices of the FAF.

Operational

Deals

with state and local governmental issues.

Unclear

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structure similar to the FASB.

its relationship to FASBFASB-do we need two?

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Issues in Financial Reporting

Primary Purpose of Financial Accounting: Financial statements that shall not

mislead the reader.

GAAP-Rule 203GAAP203-Code of Professional Conduct-Conduct--Lends

Lends enforceability to
GAAP.

Expectations Gap This is the difference between what the public

expects accountants will be able to do and be responsible for and what
the accounting profession is willing and able to assume responsibility
for.

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Issues in Financial Reporting

International Accounting Standards Committee (IASC)

Formed in 1973 to improve standards (as much as possible) in the preparation

of the financial statements.

SEC has indicated international companies may use IASC standards in the US
if the IASC meets 3 conditions.

The standards constitute a comprehensive, generally accepted basis of

accounting

The standards are of high quality and

They be rigorously interpreted and applied.

We will be considering several ethical issues or cases during the course of the
semester. Along with other references, please see pages 19 & 20 of your text for
the basic steps in the process of enhancing ethical awareness.
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ABRIVIATION

AICPA= American Institute of Certified Public Accountants

CAP = Committee on Accounting Procedure 19391939-1959
APB = Accounting Principles Board 19591959-1973 (Senior Committee of the
AICPA).
FASB=Financial Accounting Standards Board (1973(1973-present), has broader
representation than CAP or APB,Member need not be a CPA.
SEC =Securities and Exchange Commission, First group to draw up
professional standards,1933 Act-Act--Set
Set up commission and governed initial
issuance of shares,1934 Act-Act--Governed
Governed subsequent trading in shares,Statutory
power to govern professionprofession-uses veto power.

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Organisasi Badan Akuntansi

Profesional-Indonesia

Standar Akuntansi Pelaporan Keuangan

Th 1973: PAI (Prinsip Akuntansi Indonesia)

Th 1984: PAI
Th 1994: PSAK (Pernyataan Standar Akuntansi
Keuangan)

Standar Pengauditan

Th 1973: Norma Pemeriksaan Akuntan

Th 1994: Pernyataan Standar Akuntan Publik

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Kriteria Penyusunan Standar

Ada banyak faktor yg mempengaruhi penyusunan

standar

Kriteria penyusunan standar

Standar hrs menjadi keputusan yg berguna

Standar jug harus akseptabel unt konstituen yg lain, khususnya
manajemen
manajemen
 penyusun standar berada pd situasi konflik & sulit
memprediksi apa resolusi yg akseptabel dari konflik ini
Kebermanfaatan keputusan
Penurunan asimetri informasi
Konsekuensi standar baru
Aspek politis penyusunan standar

Proses aktual penyusunan standar lbh baik digambarkan

dg IGT tentang regulasi dp PIT

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