COMMITTEE ON ACCOUNTING PROCEDURE Membership 1938-1959 31 Source

Examining specific ARBs reveals the nuanced ways in which they addressed complex accounting issues. Before its issuance, there was significant ambiguity regarding the treatment of subsidiaries and affiliated companies. ARB No. 51 provided clear guidelines on when and how to consolidate financial statements, ensuring that the financial position of a parent company and its subsidiaries was accurately represented. This bulletin was particularly impactful for large conglomerates, as it provided a standardized approach to presenting their financial results. They aimed to enhance the credibility of the accounting profession by promoting ethical practices and professional judgment.

Modern Language Association

Despite issuing 51 Accounting Research Bulletins, there were concerns that the absence of a guiding framework and the lack of independence from the AICPA meant that the CAP could not effectively do its job. These concerns led to the creation of the Accounting Principles Board (APB) by the AICPA in 1959. The APB was regarded as being relatively independent of the AICPA and was created with the specific purpose of issuing authoritative guidance about accounting theory and its practical applications.

Accounting Standards and Ethical Duty

From the CAP and committee on accounting procedure APB to its current role in supporting and complementing the FASB, the AICPA has laid the groundwork for a robust and transparent accounting system that serves public interest and ensures confidence in financial reporting. The International Accounting Standards Committee (IASC) was formed in 1973 to encourage international cooperation in developing consistent worldwide accounting principles. In 2001, the IASC was succeeded by the International Accounting Standards Board (IASB), an independent private sector body that is structured similar to FASB. Between 1959 and 1973 it issued 31 opinions and developed a conceptual framework for financial accounting.

In 2000, the International Organization of Securities Commissions (IOSCO) endorsed IFRS (and any extant IAS) for cross-border security offerings in global capital markets. In 2002 the European Union (EU) made the decision to require IFRS for all companies listed on European stock exchanges. In a single stroke, all EU-listed companies were required to adopt IFRS from 2005 and were given a couple of years to get their houses in order.

Public Relations Business Studies

In its 2012 “Final Report” the SEC staff made no recommendation on potential incorporation of IFRS into U.S. financial reporting. To this end the convergence project, the “Norwalk Agreement,” between the FASB and IASB in 2002 was heralded as a much-needed step towards harmonization. Robert G. Eccles is Visiting Professor of Management Practice, and Kazbi Soonawalla is a Senior Research Fellow in Accounting at Oxford University Said Business School. This post is based on the first part of a three-part series on financial reporting by Professor Eccles and Dr. Soonawalla. In 1991 the AICPA moved 650 of its 750 employees from its quarters in Manhattan’s Rockefeller Center to Harborside, New Jersey.

• This shift towards sustainability reporting requires the development of new metrics and standards to ensure that ESG information is reliable, comparable, and relevant.
• Moreover, the group publishes the monthly Journal of Accountancy as well as newsletters—The Practicing CPA and The CPA Letter —for its membership.
• Between 1959 and 1973 it issued 31 opinions and developed a conceptual framework for financial accounting.
• Members of the AICPA must have a valid license to practice accounting (having passed the required examinations), be employed in an AICPA-approved institution, and abide by the organization’s bylaws.
• This bulletin was instrumental in standardizing practices related to inventory valuation, depreciation, and the classification of current and non-current assets.
• Topics covered by the bulletins included recommendations on United States Treasury tax notes, corporate accounting for ordinary stock dividends, intangible assets, and more.

Securities and Exchange Commission

• Unlike the APB, FASB was designed to be an independent board comprised of members who have severed their ties with their employers and private firms.
• The AICPA’s Committee on Accounting Procedure (CAP) assumed that standard-setting role in 1939, which shifted in 1959 to the Accounting Principles Board.
• To emphasize its importance and the AIA’s intent to demonstrate leadership, Clem W. Collins, AIA president, was designated CAP chairman.
• Among the revisions, the profession was required to follow the FASB standards with disciplinary consequences for violations.
• This shift was driven by the recognition that piecemeal guidance was insufficient to address the growing complexity of financial reporting.
• Thomas Sanders, one of its authors, would become part-time research director for the CAP.

Future accounting research will need to explore how these technologies can be integrated into existing frameworks and what new standards may be required to govern their use. Another noteworthy bulletin is ARB No. 45, which addressed the accounting for changes in accounting estimates. This bulletin recognized that estimates are an inherent part of financial reporting and provided guidance on how to account for changes in these estimates. By clarifying that changes in estimates should be accounted for prospectively, ARB No. 45 helped prevent the manipulation of financial results and ensured that financial statements remained reliable and transparent. This focus on ethical practices and professional judgment is a recurring theme in ARBs, underscoring their broader objective of enhancing the credibility of the accounting profession.

FASB’s The Conceptual Framework was initially issued in the 1978 and The IASC’s Framework for the Preparation and Presentation of Financial Statements was issued in 1989 and grandfathered through by the IASB in 2002. Topics covered by the bulletins included recommendations on United States Treasury tax notes, corporate accounting for ordinary stock dividends, intangible assets, and more. According to the very first bulletin, published in September 1939, the committee was created to implement an unbiased set of principles that would govern corporate accounting. The introduction read that accounting “must be judged from the standpoint of society as a whole—not from that of any one group of interested parties.” Several relatively contemporaneous publications would aid and influence both the CAP and the SEC.

In 1961, studies were published on the basic postulates of accounting and cash and funds flow. After three years, the APB had no results and turned to solving specific issues, just as the CAP had done before it. The new process anticipated that research studies would precede deliberations by the APB and that APB opinions ordinarily would be based on such studies. The special committee also envisioned that initial research would provide conceptual context from which the selection of principles by the APB would flow.

Understanding the Accounting Research Bulletins (ARBs)

It is in this context we think it is useful to put the last two years into the historical perspective of 150 years of setting standards for financial reporting. There is a rich and fascinating literature on the history of the accounting profession and establishment of accounting standards with Professor Stephen A. Zeff being one of the most distinguished scholars in this field. The influence of Accounting Research Bulletins extends beyond the borders of the United States, impacting international financial reporting practices. The principles and guidelines established by ARBs laid the groundwork for the development of more sophisticated accounting standards globally.

A consensus had grown by 1959 that the CAP was inadequate to deal with new developments in corporate policy, taxation, and government regulation. Authority over tax practice was a considerable source of contention between accountants and lawyers until 1951, when the AIA and American Bar Association jointly approved adoption of a Statement of Principles for Lawyers and CPAs in Tax Practice. Other important actions of the 1950s included the establishment of a committee on management services (1954) and a committee on the economics of accounting practice (1957), as well as the creation of a program of continuing education (1958). By 1961, the institute’s staff had grown to 165 and was organized into seven divisions. A number of members and state societies contributed in 1917 to an endowment fund in order to establish and support a central library for the accounting profession. This fund enabled the AIA to publish a number of technical books and monographs in the 1920s.