FASB Comment Letters

Posted: November 27th, 2013

FASB Comment Letters

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FASB Comment Letters

The general issue and argument that the author, Rick Gore, Ph.D., was trying to put across is about the revision of the accounting framework. The author needs revisions to be made on the accounting framework after the board members have gone through it. This is because the FASB document would need some revisiting and solutions that will be vital to making any necessary changes. In addition, he argues that the accounting framework needs to clarify precisely the way changes need to be interpreted. Reexamining and revising the document of accounting framework is beneficial in making of fundamental advancement (Financial Accounting Standards Board, 2005). Thus, the author argues that the board members should fix those areas where the present framework is inconsistent.

The tone of the writer in business writing is appropriate. This is because the kind of language used in writing is mostly used by business analysts. The tone is persuasive and this will make many people respond positively towards making changes to the accounting framework. The writer follows business ethical values in addressing issues and making clear communications. This is vital in achieving success in any business. Clarke (2009) points out that in business, accountants needs to follow the principles of accounting standards and understand the mode of passing the information across the organization. This will enable the businesses to achieve better results.

The author gives a convincing argument of his opinions by trying to explain to the board members about the importance of revising and reexamining the accounting frameworks. He tries to convince them by conveying to them that the conceptual framework enables set standards to become effective. This is through making analysis and recommendations on the accounting issues (Financial Accounting Standards Board, 2002). In addition, he explains to them the importance of making changes to the frameworks. This enables everyone to understand clearly the reason of revising the framework, thereby a convincing argument.

The authoritative resource cited in the argument by the author is Henry Hatfield’s expressions, which helped the author expound on neutrality and conservatism. The argument was about misrepresentation and dishonesty towards financial information. Therefore, the author used Hatfield’s source to explain the way conservative restriction can avert exaggerations, which is harmful. In addition, in the author’s argument, he recommends the board to use conservatism eviction and use a more touching approach to achieve neutrality (Weygandt, Kieso and Kimmel, 2011). He uses Professor Watts’s ideas in his arguments by suggesting that the framework needs to clarify conservatism to offer unbiased information.

The author presented a solution to the issue by encouraging board members to implement the proprietary perspectives. Libby, Libby and Short (2004) argue that proprietary perspectives enable accountants to correct the inequality through recognizing shareholders as the members of the organization. Thus, the author wants the entity to construct a fictitious entity and people who can determine the transaction effects of the financial statements. Moreover, he wants the accounting profession and financial report users to be educated on the accounting frameworks.

The changes that I would make to this letter are that financial accounting requires adjustments from time to time. Unadjusted frameworks may mislead the user and the content could mislead the management. Therefore, the paper needs more credibility whereby the author needs to address issues that arise due to poor frameworks adopted. O’connell (2006) maintains that accounting frameworks need to be concise and precise. Thus, the author could address the issue of precision when handling financial reports. Moreover, the accounting report should have better foundations that are logically reliable to every user for proper interpretation of financial reports.

The accountant plays a vital role in the process of decision-making within the organization. He or she provides accounting information to the organizations, which is used to make informed business decisions. An accountant has to plan, direct and control finances through managing them well. This is because in any accounting decision they make, they have to make a financial report, which indicates the way financial resources are directed and utilized within an organization. Therefore, it is the work of an accountant to use accounting information in making the organizational budget as well as in making a dual reporting relationship. This means that they have to provide accounting information basing on financial and prepared information.

From my own experience within my organization, the accountant interacts with other departments through making variance analysis and reviewing other departments’ management activities. This is done in order to monitor costs in the business team and ensure that the accountability is meaningful to the entire organizational team. Clarke (2009) points out that the organization’s financial department needs to work as a team through making financial modeling. This is what happens in my organization and it has helped it perform better. Thus, organizations interact together through providing cost transparency in financial information.

The primary communication tools used by accountants to communicate within an organization are mostly software systems. There are diverse software applications that are most efficient while communicating across the organization. One of them is Microsoft Excel. Such systems are easy to use in recording of financial statements. Additionally, use of hardware is a preferred convenience because hardware stores vital information that can be retrieved any time for confirmation in case soft data is lost. The accounting information is stored in various hardware systems and together with use of messages such as e-mails, is used for making communication easier from one department to another.

Reference

Clarke, E. A. (2009). Accounting: An introduction to principles and practice. South Melbourne,

Vic: Cengage Learning.

Financial Accounting Standards Board. (2002). Statement of financial accounting standards no.

143, accounting for asset retirement obligations. Norwalk, Conn: Financial Accounting Standards Board.

Financial Accounting Standards Board. (2005). 2005 Financial Accounting Research System

            (FARS). New York, NY: John Wiley & Sons.

Libby, R., Libby, P. A., & Short, D. G. (2004). Financial accounting. Boston: McGraw-

Hill/Irwin.

O’connell, V. (January 01, 2006). The Impact of Accounting Conservatism on the Compensation

Relevance of UK Earnings. European Accounting Review, 15, 4, 627-649.

Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. (2011). Financial accounting. Hoboken, NJ:

Wiley.