Case Study1Case StudyAcc 497Case 1-3: Politicalization of Accounting Standardsa. The original formation of accounting organizations came from the need to be more organized, with standards that would be followed by all companies with the idea ofCase Study 2protecting the business and the stockholder. From this need the Committee on Accounting Procedure (CAP) was formed. This committee had the authority to issue pronouncements on accounting procedures with the idea of establishing generally accepted practices. This committee became more active after the release of the Securities and Exchange Commission’s (SEC) ARS No. 4 which stated that reports filed with the SEC must be in accordance with those practices that have “substantial authoritative support,” (Schroeder, Clark, & Cathey,0 2011, p. 6). Due to the conflicts of the CAP committee, such as the members were part time and the work seemed to be inconsistent, the American Institute ofCertified Public Accountants (AICPA) formed the Accounting Principles Board. The objectives of this board are to issue pronouncements pertaining to generally accepted accounting principles (GAAP). Following the APB the Financial Accounting Standards Board (FASB) was formed in response to the criticism of the development of GAAP by the APB. FASB was expected to be more effective in the issuing of principles due to its smaller size and full independence from the SEC and the government. It is natural that the work of committees will be influenced by other committees, due to the fact that they all have the same goals; develop generally accepted accounting principles that all businesses will follow. If a committee does not appear to be doing what they should then the need to reorganize, or establish a completely new committee, is apparent. So, the creation of, and demise of the first two, in my opinion, does create an indication of politicalization of accounting standard setting. b. The arguments that can be raised to support the politicalization of accounting standard setting can be summed up into one: the committees working together, compromising inCase Study 3setting standards would result in more cohesive standards, and more understandability of those standards.c. The arguments against politicalization of accounting standards can also be summed up into one: independence. The compromising of setting standards by committees as the result of the influence of other boards will result in less independence of each committee. Committees having independence results in their work being more dependable.Case 1-4 Generally Accepted Accounting Principles in Ch. 1Investopedia (2012) states that “Accounting principles are the rules and guidelines that companies must follow when reporting financial data” and explains that because “… accounting principles differ across the world, investors should be aware of these differences and account for them when comparing companies in different countries” (para.1-2). The primary goal for the accounting principles is to provide support and resources for accountants and financial professionals to conduct an assessment on a companies’ financial data. Although there are differences in accounting principles between countries, it would not affect the market, the investors should be careful in making decisions on investment. We may see the accounting principles term in audit report and it only refers tothe advice from the accounting counsel such as AICPA. The common set of accounting principles0is GAAP. To remain listed on many major stockexchanges in the U.S., companies must file regular financial statements reported accordingto GAAP. GAAP is a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information. The CPA or auditors will collect the authoritative evidence and determine whether it is sufficient to apply on GAAP.Case Study 4Because of the constant changes of GAAP and lack of up-to-date level, diversity in accounting practice will always exist among independent entities. It has been discussed that there are too many accounting standards issued on businesses by the FASB and AICPA. Therefore, it may cause difficulties for small businesses because they do not havethe resources to research the pronouncements. The Emerging Issues Task Force was (EITF) advanced in order to support businesses in better understanding accounting issues not clearly stated in the pronouncements provided by the FASB. The EITF also advises the FASB staff on whether a FASB issue needs to be acted on and helps with new types ofsecurities, new products and services, and variations in accounting for existing types of transactions. Many accountants have argued for disclosure standard differentials as a possible solution about the overload problems of those standards. Case 2-2: The Theoretical Foundation of Accounting Principlesa. Discuss the goals and objective of i. The Conceptual Frameworkii. The Emerging Issues Task ForceThe Conceptual Framework Project is a project worked on by both the International Accounting Standards Board (IASB) and FASB with the intentions of creating an improved common conceptual framework. The IASB (2007) reports that the goals of the project are “developing standards that are principles-based, internally consistent, internationally converged, and that lead to financial reporting that provides the information needed for investment, credit, and similar decisions” (para. 1).Case Study 5The objective of the Conceptual Framework Project is to build on the existing frameworkthat IASB and FASB have in place, to consider new developments since the project began, and ultimately to create a consistent and complete framework. The EITF was created in 1984 by FASB to meet two objectives: to assist in identifying issues and problems that might require action and expanding the scope of the FASB Technical Bulletins in an effort to offer quicker guidance on a wider variety of issues (Schroeder, R., Clark,M., & Cathey, J., 2011, p. 13). The task force was created to address issues not addressed in current accounting pronouncements that are in need of immediate review and resolution. The task force was also created to address the opposite of the prior reason mentioned called the standards overload problem. Schroeder, Clark, and Cathey (2011) state that the goal of the ETIF is to “provide timely guidance on new issues while limiting the