Accounting Principles Board - Explained
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Accounting Principles Board
The Accounting Principle Board was created by the American Institute of Certified Public Accountants (AICPA) in 1959 as an authoritative body for the purpose of issuing guidelines and rules on accounting principles. The Accounting Principle Board was replaced by the Financial Accounting Standards Board (FASB) in 1973.
Back to: ACCOUNTING, TAX, & REPORTING
A Little More on What is the Accounting Principles Board (APB)
During the 14 years of its existence, the Accounting Principle Board issued 31 opinions and four statements related to income taxes, intangibles, early extinguishment of debt, lease, business combination, and others. It also had issued opinions on accounting policies disclosure and interim financial data reporting among others. Some of its opinions are still part of the Generally Accepted Accounting Principles (GAAP), but most of those are either amended or abolished by the Financial Accounting Standards Board. The statements and opinions published by the Accounting Principle Board were instrumental in promoting good practice in accounting and improving its theories. The membership of the Accounting Principles Board varied between 18 and 21. The participants were representatives from major accounting firms, academia, and industry. Support of two-third members was required for issuing an opinion. Before the Accounting Principles Board, there was a Committee on Accounting Procedure, but it was considered ineffective in maintaining the standards and integrity of the accounting practice. The Accounting Principles Board played important roles in maintaining the standards and laying the foundation of the Generally Accepted Accounting Principles but with time it too became ineffective and failed to keep up the pace with the ever-changing corporate America. The types of transactional activity got changed over time, and to deal with it the need for an independent organization was felt necessary. It was argued that there were chances of APB getting influenced by its parent organization. The members of the Accounting Principles Board operated on a part-time basis and thus the output was low. The Financial Accounting Standards Board was created with fully-funded full-time staffs so that they can devote more time and can work independently. As a result, the FASB has created more contents covering a varied range of accounting theory and its practices.
Reference for Accounting Principles Board APB
Academic research on Accounting Principles Board-APB
Opinions of Accounting Principles Board, Board, A. P. (1967). Opinions of Accounting Principles Board.Content Analysis and Readability Formulas as Applied To the Accounting Principles Board" Opi Nions", Stead, B. A. (1977). Content Analysis and Readability Formulas as Applied To the Accounting Principles Board" Opi Nions". The Journal of Business Communication (1973), 14(3), 23-34. The Accounting Principles Board "Opinions" are a significant underpinning of the accounting profession. The profession has also recognized the need for clear, concise writing. This study analyzes the twenty-four APB Opin ions that contain an "Opinion" section. The Farr-Jenkins-Paterson New Reading Ease Index indicated that three opinions were "difficult"; nine teen, "very difficult"; and two could not be categorized. Cloze scores indicated that accounting majors fared no better than the general popula tion for all the opinions, which may reflect the lack of necessary context for understanding.The effects of accounting principles board opinion no. 15 on Earnings per share: A simulation study, Frankfurter, G., & Horwitz, B. (1972). The effects of accounting principles board opinion no. 15 on Earnings per share: A simulation study. The Accounting Review, 47(2), 245-259.The SEC preempts the Accounting Principles Board in 1965: The classification of the deferred tax credit relating to installment sales, Zeff, S. A. (2007). The SEC preempts the Accounting Principles Board in 1965: The classification of the deferred tax credit relating to installment sales. Accounting Historians Journal, 34(1), 1-23.The Membership of the Accounting Principles Board, Zeff, S. A. (2007). The Membership of the Accounting Principles Board. Research in Accounting Regulation, 19, 207-214. Sixty-three persons served as members of the Accounting Principles Board during its operations from 1959 to 1973. In this report the backgrounds and affiliations of these members are detailed. The study represents a unique composition providing details about the board membership, which will aid in the awareness about an entity, which in its own time, was among the most important and controversial bodies serving the needs of the accounting profession, government, investors, and the business community. The Accounting Principles Board and differences and inconsistencies in accounting practice: An interim appraisal, Sprouse, R. T., & Vagts, D. F. (1965). The Accounting Principles Board and differences and inconsistencies in accounting practice: An interim appraisal. Law & Contemp. Probs., 30, 706.