The Development Process Of Accounting Standards And The Application Of IFRS

In earlier this year,the Ministry of Finance of China consulted its Advisory Committee on the topic of"goodwill and its impairment".That the accounting treatment of goodwill in China might change from the current internationally accepted impairment method to the amortization method has aroused widespread concern and discussion.This may imply some different thoughts about the convergence strategy on accounting standards in China,and more generally,it relates to the underlying question about the rationality and reality of the international convergence of accounting standards.Specifically,what is the nature of accounting standards?Is it dominated by technical attributes or political attributes?Furthermore,is it reasonable or possible that the process of accounting standards setting controlled by one or few organizations?Is it necessary for individual countries/economies to establish their own accounting standards setting bodies and to develop accounting standards independently?So far,there is no commonly accepted conclusion on these issues.This paper attempts to answer these questions from the perspective of accounting standards setting.Firstly,this paper focuses on the standard setting activities of the FASB in the past 36 years(between its establishment in 1973 and the reform of the accounting Standards codification in 2009),and provides a comprehensive description and comparison of the lobbying activities about the 171 standards issued during the 36 years.We then further explores the relationship between lobbying pressure and FASB decision-making.The results of the ANOVA test show that there are negative significant differences between the lobbying pressure and the standard’s voting rate or its subsequent revisions respectively.This paper then makes a detailed analysis of the project about share-based payment,which is one of the most controversial projects in the FASB’s history.Mainly,it analyzes the background and disputes of the project,as well as the FASB’s compromise and response in the face of lobbying pressure.This paper reach the following conclusion:accounting standards are a relatively stable set of rules produced from conflicts and compromise among different interest groups,given in a specific social and economic context.And accounting standards setting is a fully politicized process.In around the world,there are a number of countries and regions,their cultural origins,political regimes and economic systems are very different,it’s safe to say that the magnitude of interest conflicts on the international level is much higher than on the country level.Furthermore,unlike in a country,there is no legitimate enforcement to ensure the implementation of accounting standards internationally.Our conclusions cast doubts on IASB’s vision to implement the single high-quality accounting standards globally",from the perspective of legitimacy and possibility of coming true.In addition,it raises questions about the strategy of(fully or substantially)convergence to IFRS in emerging economies,including China.