The Politicization Of Accounting The Impact Of Politics...

The article The Politicization of Accounting: The impact of politics on accounting standards by David Solomons discusses the relationship between the field of accounting and politics. Government agendas are meant to work towards achieving economic growth, both on a micro and macro level. Since the Financial Accounting Standards Board (FASB) has the ability to create policies that aid the government with their goals, the FASB are obligated to use their power to benefit the government, the economy, and in turn the greater public. Both politicization and neutrality have benefits, but each have the potential to solely benefit certain stakeholders, becoming exclusionary to other interest groups. The reason that the politicization or neutrality of accounting standards is so widely debated is because of the varying opinions regarding what the standards should accomplish. Neutrality and politicization have an inverse relationship where there is a trade-off between the two; losing informatio n neutrality results in more politically influenced standards, while maintaining impartiality results in less politicization. The most crucial trade-off that exists in this relationship is the one between relevance and reliability. Information neutrality leads to more reliable information because neutrality eliminates bias of any single stakeholder. Therefore, when accounting standards are free from political influence they are more likely to benefit the greatest amount of financial statementShow MoreRelatedCurrent Financial Reporting Standards On The Workplace Essay1744 Words   |  7 PagesCurrent Financial Reporting Issues It is incontestable that international financial reporting standards (IFRS) are in vogue and global conformity theoretically on the doorstep as about 100 countries implement standard financial regulations. 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