Presentation on

DEVELOPMENT OF ACCOUNTING PRINCIPLES

 Submited by
Submitted to Name Student ID
Ayesha Siddika Moon 1803036
Mst. Helen Parvin Mst. Kaniz Fatima 1803037
Lecturer Most. Jannatun 1803038
Dept. of Accounting Ferdous Doyel
Faculty of Business Studies Md. Mahmudul Hasan 1803039
HSTU, Dinajpur-5200 Md. Shohan Hasan 1803040
Zitendro Nath Roy 1803041
Md.Israfil Pramanik 1803044
Aparesh Kumar 1803074
Mohanta
 TABLE OF CONTENT

1. What is Accounting Principles ?

2. The First Period of Development
3. The Second Period of Development
4. The Third Period of Development
5. The Fourth Period of Development
6. The Issuance of Statements and Research Bulletins
7. The Statements of Accounting Principles
8. The Development of Constitution of GAAP
9. The criticism of APB
 What is Accounting Principles ?

Accounting principles are the rules and guidelines

that companies and other stakeholders must follow
when reporting financial data.
 The First Period of Development

 It started around 1930 and ended at the outest of World War-II (1939) which was marked by American
Institute of Accountants (AIA) and New York Stock Exchange (NYSE).

 In 1939, AIA published 'A tentative Statement of Accounting Principles' and revised in 1941 with the words
"A Tentative Statement"

 After that "the Statement of Accounting Principles" was published by American Accounting Association
(AAA) in 1940 and reprinted in 1959,1963,and 1968.

 Then the AIA's Committee on Accounting Procedure (CAP) published the first Accounting Research Bulletin
(ARB).
 The Second Period of Development

 Second period started after World War-II and ended in 1959.

 In this period attention was directed toward particular reporting problems.

 The development of a comprehensive statement of accounting principles was temporarily

abandoned.

 The Committee on Accounting Procedure (CAP) published total 51 accounting research

bulletins between 1938 to 1959.

 These included 8 reports of committee on terminology entitled Accounting Terminology

Bulletin No.1, "Review and Resume".

 They represent a prime source of "Generally accepted Accounting Principles"(GAAP).

 The Third Period of Development
(1959 to 1973)

1. Various Institute and associations and other users of accounting information

were highly discontented with the scope and action taken by AICPA. It was
moving slowly in the development of accounting principles.

2. APB was formed in 1959, to examine basic accounting assumption, identify

best principles and devise new method to guide the industry.

3. A research arms to support the pronouncements of APB known as Accounting

research division.It provide 15 accounting research studies.

4. APB published 31 opinion and 6 statements.

 The Fourth Period of Development
(Started from 1973)

 In that time the Financial Accounting Standards Boards (FASB) was formed as a consequence of stock market crash of 1968.

 Then the accountants were criticized for managing the income statements by selecting from different generally accepted
accounting principles.

 The FASB has so far published 137 statements of standards and 6 concepts statements, besides many interpretations.

 After that, Different committees, associations, boards and institutes made pronouncements from time to time to develop and
improve the principles of accounting.

 Which are commonly known as “generally accepted accounting. Principles” (GAAP) in United States.
 The Issuance of Statements and Research
Bulletins

 American Institute of Accountants (AIA) was changed to American Institute of Certified Public
Accountants (AICPA) In 1957.

 It has two committees - (a) The Accounting Standards Executive committee.

(b) The Auditing Standards Committee.

 They issued Statements of Position (SOPs)on accounting issues.

 In 1938 it formed the Committee on Accounting Procedures (CAP).

 The CAP issued 51 Accounting Research Bulletins (ARB) that suggesting accounting treatments for
various items and transactions over a period.
 The Statements of Accounting Principles

 It is submitted by two accounting professores and legal scholar of a

committee given by Haskins and sells foundation.

 It is published by American Institutions of Accountants (AIA) in 1938.

 The generalizations were made in part 6 of the report.

 The report stated 6 general principles, 6 income statement principles, 8

balance sheet principles, 4 principles of consolidated statements.
 The Development of Constitution of
GAAP

1. The APB consisted of Between 18 and 21 members representing the public accounting firms,
industry, government and academics, " to advance the written expression of what constitutes
GAAP".

2. A director of accounting research, with a permanent research staff, was also appointed.

3. The immediate projects of the accounting research staff were to be concerned with "a study of
the postulates underlying accounting principles and a study of the broad principles of
accounting ".

4. The then president of AICPA, Alvin Jennings, proposed that a new approach be taken and that
the development of accounting principles be considered " in the nature of pure research ".
 The criticism of APB

 In Horingreen's view, "A great mistake had been made in believing

that the power to set principles rested in the private sector. The
increasing role of the federal government in our society is an
unstopable phenomenon.“

 The APB could not resist the pressure from the public accounting
firms, their clints, industry associations and the SEC.
 The criticism of APB
 But Hendriksen has expressed the view that, "The APB should not be criticized
too severely for attempting to do what was impossible. Accounting theory had
not arrived at a stage where a grand theory could have been formulated."

 In the response to this kind of criticism of the APB, the then president of the
AICPA announced the formation of two study groups-

I. First one, to study 'objectives of financial statements' - chaired by Robert M.

Trueblood.

II. And the other, for 'Establishment of Account Principles' - headed by Fancis
M. Wheat.
THANK YOU