The Emerging Issues Task Force of the Financial Accounting Standards Board: Its Role and Influence in Setting Standards for the Accounting Profession
Date of Submission
Master of Science in Accounting
FASB Emerging Issues Task Force, Accounting--Standards--United States
Call No. at the Univ. of New Haven Library
AS 36 .N29 Acc. 1988 no.3
The Emerging Issues Task Force (EITF) has become a major "player" in the accounting and financial reporting standards-setting arena. Although the EITF does not have standards-setting authority, it significantly influences the Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), the Accounting Standards Executive Committee (AcSEC) and the Auditing Standards Executive Committee (AudSEC) of the American Institute of CPAs.
In spite of its increasing importance and sphere of influence, the EITF's existence, operations, and "consensus opinions" remain largely unknown among certain segments of the accounting and financial reporting profession. Some factions of the accounting profession have not paid close attention to the workings of the EITF because the EITF has no authority to issue or enforce accounting standards. But the consensus opinions are becoming a more critical part of the accountant's professional library for several reasons.
First, the consensus opinions reflect the collective thinking of a powerful association of individuals who have a strong influence on the practice of accounting. Each EITF member communicates the consensus to their respective firms where it is safe to assume, they confirm or become part of the firm's - and their clients'- policies and practices.
Second, the consensus are effectively "sanctioned" by both the FASB and the SEC. Both organizations are heavily involved in the activities of the EITF and have expressly supported their work. So although the consensus are not formal "decrees" in the sense of FASB Statements or the interpretive guidance provided by SEC Staff Accounting Bulletins, the consensus opinions do become part of the accounting literature referred to by those researching accounting issues.
There is a special importance for publicly held companies. SEC Staff Accounting Bulletin No. 57 expressed support for the work of the EITF and the SEC's Chief Accountant attends and participates in every meeting. The SEC has made it categorically clear that any registrant with accounting that differs from the EITF's consensus may be challenged. In fact, the SEC often clarifies issues for public companies as part of the EITF's meeting proceedings.
A literature search was conducted to identify the underlying political, economic, and professional incentives for establishing the EITF by the Financial Accounting Standards Advisory Council, which functions as an oversight board to the FASB.
In addition, a review of all documentation available under the FASB's "Sunshine Doctrine" was reviewed to identify the objectives and operations of the EITF since its inception in 1984.
Finally, interviews with pertinent FASB staff and EITF representatives were conducted to gain insight as to the "inner workings" of this most influential body of financial reporting and accounting professionals.
The results of this study indicate that the EITF is a team of strong players dedicated to assisting the FASB in identifying and resolving emerging issues and implementation problems. Its method of operating is concise and direct, and its decisions are tempered with experience and a commitment to improving the profession and practice of accounting.
The EITF is a young association, yet its contributions have been significant. As more accounting professionals benefit from the guidance contained in the consensus and from the EITF's role in issue identification for the FASB, it appears safe to assume that the coming years will result in even greater recognition for the work of the EITF.
Granatowski, Doris A., "The Emerging Issues Task Force of the Financial Accounting Standards Board: Its Role and Influence in Setting Standards for the Accounting Profession" (1988). Master's Theses. 77.