Chapter 3 The APB Post ARS

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Chapter 3The APB Post ARS 1 and 3

• Examine the post-rejection of ARS 1 and 3
  tenure of APB
• Consider second major theory formulation ASOBAT

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Standard Setting V The APB-Post ARS 1 and 3

• Started off with Golden Opportunity (G.O.) to
  develop theory.
• Possible redemption G.O. 2

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GO 2Accounting for Investment Credit

• Options?
• How did the APB react to golden opportunity 2?
• What consequences followed?

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Questions

• Why do you think the APB adopted the deferral
  approach to the IC?
• If you had been a member of the APB, how would
  you have felt when the SEC overruled Opinion 2
  with ASR 96 in January, 1963?

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Theory IIIASOBAT 1966

• Profession still theory-less
• Turn to who?
• Comparative advantage?

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ASOBAT

• What was it to accomplish?
• the process of identifying, measuring, and
  communicating economic information to permit
  informed judgments and decisions by users of the
  information. 3 definitional differences?
• Approach, Contents, and Core

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ASOBAT

• Flavor

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ASOBAT 3 Controversy

• Three criticisms
• R. Morrison
• G. Sorter
• R. Sterling

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ASOBAT Critique 1

• R. Morrison, the practitioner, Commentary

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ASOBAT Critique 2

• Concerns G. Sorter
• An Events Approach to Basic Accounting Theory,
  Accounting Review 1/1969.

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ASOBAT Critique 3

• Concerns Sterling
• ASOBAT A Review Article, Journal of
  Accounting Research, Spring 1967.

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APB Failing

• By 1970, Major Problems emerged

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International Other Approaches to Standard
Setting

• World-wide Standard Setting Approaches-1. public,
  2. private, 3. private as public, and 4. mixed.