The First Quarter Century of the GASB (1984–2009): A Perspective on Standard Setting (Part One)

The Governmental Accounting Standards Board (hereafter GASB or Board) was established in April 1984 as the authoritative accounting standard‐setting body for United States state and local governmental entities. There are over 87,000 state and local entities in the country, and for the most part these entities are required to comply with the generally accepted accounting principles established by the GASB; hence, the work of the GASB is significant. On 30 June 2009, the GASB completed its twenty‐fifth year of standard setting. Because of the Board's influence and the importance of its mission, an increased understanding of the GASB and its accomplishments during its first 25 years of existence is important. This is the first of two papers which together provide a complete sequential treatment of the GASB's operational history through the end of its first quarter century. This first paper begins with an historical perspective about municipal accounting issues from colonial times to 1934. The origin of professional self‐determining standards is the feature of the next section, identifying standard‐setting bodies that contributed to municipal accounting from 1934 to 1984. The early activities of the Board are then reviewed. Two appendices are provided to detail the composition of the Board during its first quarter century, along with biographical information about the early Board members and later Chair and Vice Chair personnel. This segment concludes with a review of the relationship of other governmental standard setting bodies at the federal level and the international level.     

A review of Australian management accounting research: 1980–2009

This paper reviews 231 papers published by 10 leading management accounting journals between the years 1980 and 2009. The review is structured according to research topics, research settings, research theories, research method and primary data analysis technique. Based on the results of this review, the paper provides reflections on the evolution of Australian management accounting research over the last 30 years and discusses opportunities for future research.     

UK Accounting Disclosure Practices and Information Asymmetry During the First Quarter of the Twentieth Century: The Effects on Book Returns and Dividend Cover

During the first quarter of the twentieth century there was marked information asymmetry as between senior managers and shareholders. The differences in information provision can be dichotomised into 'volume' and 'distortion' effects. This paper measures the (matched pair) differences between two standard measures of corporate performance, returns on equity capital and equity dividend cover, based on internal and then published data, in each case derived from a broadly-based set of quoted companies in UK industrial sectors. The results suggest that levels of information distortion were low until 1914, and material and much higher, after rather than during the First World War.     

基于交易成本的技术标准联盟形成机理研究

技术标准专利化趋势加速了以技术标准联盟设立技术标准的趋势.从交易成本视角看,市场、科层组织和技术标准联盟在技术标准设立过程中都会产生生产成本、机会主义成本、信息成本以及协调成本,相比之下,技术标准联盟在降低交易费用、提高交易质量方面有明显优势,技术标准联盟形成有其合理性.     

A review of research on regulation changes in the Asia‐Pacific region

In this study, we review the financial research on regulation in the Asia‐Pacific region. We do this by analysing six leading regional accounting and finance journals – Abacus, Accounting & Finance, Australian Accounting Review, Australian Journal of Management, International Review of Finance and the Pacific‐Basin Finance Journal. We identify five main themes of regulation research relating to: (i) banking and financial institutions, (ii) markets and trading, (iii) corporate governance, (iv) disclosure and (v) accounting standard setting. Our paper synthesises the regional literature in these areas and provide some suggestions for future directions.     

Agenda Entrance Complexity in International Accounting Standard Setting: The Case of IFRS for SMEs

Features of rational decision making (such as agenda entrance criteria and statement of jurisdiction) barely conceal the complexity of international accounting standard setting. In 2003, when the International Financial Reporting Standard for Small and Medium‐sized Entities (IFRS for SMEs) project achieved agenda entrance, the International Accounting Standards Board's (IASB) jurisdiction was to develop, ‘a single set of … accounting standards … to help participants in the world's capital markets’. Drawing on interviewees' recollections and other material, this study of how the project achieved agenda entrance finds within‐IASB opposition to the project, arguing it was outside the IASB's jurisdiction that dissolved with the realisation that the IASB's jurisdiction would be changed to encompass the project.     

The Ontario Securities Commission on Accounting and Auditing from the 1960s to 2008–Part 2: The First Four Chief Accountants, 1986–1996*

This article, Part 2 of a historical review and analysis of the Ontario Securities Commission (OSC), describes the role played by the first four Chief Accountants in the regulation of accounting and auditing from 1986 to 1996. Part 1 dealt with the period from the 1960s to 1985. Part 3 will treat the role played by the fifth Chief Accountant, from 1996 to 2008. As the principal Canadian stock exchange in recent times has been the Toronto Stock Exchange, the OSC has been the most important securities market regulator in Canada. Prior to this article, the academic and professional accounting literature has been largely barren on the OSC’s evolving role on accounting and auditing issues.     

The Evolution of Standard Costing in the U.K. and U.S.: From Decision Making to Control

Decision making and control are two fundamental components of industrial management that are aided by accounting information. This article traces the evolution of standard costing in the U.K. and U.S. and describes how it has served these two purposes over time. At the start of the industrial revolution, standard costing, in the form of past actual costs, aided managers in make-or-buy, pricing, outsourcing and other routine and special decisions. In the late nineteenth century, as the mass production of homogeneous products became more common, predetermined, norm-based standard costs were promoted as the means to control operations and reduce waste. The use of predetermined costs was recommended by both academic and professional branches well into the twentieth century. Since the mid-1980s, norm-based standards have come under fire for not providing appropriate strategic signals in an era of global competition, continuous improvement and perpetual cost reduction.
This article compares the nature of standard costing practices in the British Industrial Revolution with those that evolved in the U.S. under scientific management. The enquiry is not limited to double-entry systems and, like Miller and Napier (1993), the domain is broadened to include other forms of cost-keeping practices. We utilize primary and secondary sources to argue that the environment and rationales for standard costs have changed fundamentally over time. It is speculated that in the future standard costing will be used far less for individual accountability or operational control, but will return to its decision-making roots in the form of long-run cost targets that benchmark the success of continuous cost-reduction efforts.     

Meeting user information needs: The impact of major changes in FASB and GASB standards on financial reporting by colleges and universities

This longitudinal study reports the impact of changes in generally accepted accounting principles on financial statement disclosures for 100 public and private institutions of higher education. Disclosures from the period when all colleges and universities followed the same accounting standards are compared with disclosures in periods after major changes in accounting and reporting standards were made by the Financial Accounting Standards Board (FASB) for private institutions and by the Governmental Accounting Standards Board (GASB) for public institutions. We find that an importance-weighted disclosure index shows that user needs are better met using the new reporting standards for public but not private institutions. An expanded unweighted index, however, shows improvement for both public and private colleges and universities. Using this disclosure index, the improvement for universities reporting under GASB standards exceeded the improvement for those reporting under FASB standards.     

The Withdrawal of Current Cost Accounting in the United Kingdom: A Study of the Accounting Standards Committee

Evidence from the archives of the U.K. Accounting Standards Committee (ASC) is used to trace the events leading to the withdrawal of the current cost accounting standard, SSAP 16, from 1980 to 1988. Three central issues are addressed. First, the ASC's role as a regulatory body is considered in the light of the failure to obtain compliance with SSAP 16 and to find an acceptable replacement. Second, the decline in support for SSAP 16 is explained in terms of changes in the economic environment. Third, the roles of different interest groups in the process are analysed.     

Forces Leading to the Adoption of Accrual Accounting by the Canadian Federal Government: An Institutional Perspective*/ LES FORCES AYANT MENÉ L'ADMINISTRATION FÉDÉRALE CANADIENNE À ADOPTER LA COMPTABILITÉ D'EXERCICE: UNE PERSPECTIVE INSTITUTIONNELLE

In 1995, the federal government of Canada announced that it would adopt full accrual accounting. The change was fully implemented at the department level in 2001 and for government‐wide financial reporting in 2003. Using the perspective of institutional theory, we examine several factors that had the potential to influence the federal government's decision to adopt full accrual accounting, including two royal commissions, the Office of the Auditor General of Canada, the Canadian Institute of Chartered Accountants, credit markets, and the practices of other national governments. We find that the decision to change to accrual accounting can be largely attributed to coercive and normative influences of the Office of the Auditor General of Canada (supported by the normative influence of the Canadian Institute of Chartered Accountants' Public Sector Accounting Board) and mimetic isomorphism with other members of the federal government's organizational field.     

Inside the Black Box of IASB Standard Setting: Evidence from Board Meeting Audio Playbacks on the Amendment of IAS 19 (2011)

We provide evidence on the little researched internal sphere of private IASB standard setting, more specifically, on the dynamic of board discussions and the respective impact of exogenous input such as comment letters, the array of arguments evoked in IASB debates, individual board member contribution and board-staff relations. We conduct a content analysis of audio recordings of 14 IASB meetings on the amendment of IAS 19 Employee Benefits (2011) between November 2008 and February 2010. Our main findings comprise the argument-based handling of comment letters not being conditioned by the political or economic importance of the senders, the gatekeeper role of staff members in channelling exogenous input and their equal role in board discussions and the dominant reference to conceptual arguments there. We also point to the heterogeneous involvement of board members, their different attribution to key issues and to further observations regarding the meeting governance, board’s discussion culture and etiquette. Our paper adds to the literature on private IASB standard setting, pension accounting and group decision making.

Data: All data are available from the public sources identified in this paper     

Disclosure policy: A discussion of Leuz, Triantis and Wang (2008) on “going dark”

LTW (2008) examine firms withdrawing from the SEC reporting system but continuing to trade on Pink Sheets. The paper finds that Sarbanes-Oxley increased the propensity of firms to go dark but, counter to conventional wisdom, had no significant effect on the rate of going-private transactions. Agency costs, as well as poor growth opportunities, proximity to financial distress, and increased compliance costs arising from SOX increase the propensity to go dark. Suggestions to improve the empirical implementation and interpretation involve including additional control and more suitable explanatory variables, and more attention to causation issues and to the quantification of economic significance.     

Commentary: IFRS and the Domestic Standard Setter – The Challenge of the Public Sector

In his interesting reflections on accounting standard setting, Kevin Stevenson raises the issue again – applying business accounting standards to the public sector. This matter has been the subject of debate for the past decade. I argue that because the nature and roles of governments differ fundamentally from those of business, governments require a set of accounting standards tailored to suit their special needs. Their accounting systems must report the appropriate information required for the efficient management of the nation's financial affairs.     

The Ontario Securities Commission on Accounting and Auditing from the 1960s to 2008 – Part 1: 1960s to 1985*

We present Part 1 of a historical review and analysis of the role played by the Ontario Securities Commission (OSC) in accounting and auditing from the 1960s onwards. Part 1 deals with the period from the 1960s to 1985. Parts 2 and 3 will treat the roles played by the first five Chief Accountants, from 1986 to 2008. As the principal Canadian stock exchange in recent times has been the Toronto Stock Exchange, the OSC has been the most important securities market regulator in Canada. Prior to this article, the academic and professional accounting literature has been largely barren on the OSC’s evolving role on accounting and auditing issues.     

The Life and Works of Luca Pacioli (1446/7–1517), Humanist Educator

Accounting has few heroes, but one that most acknowledge as worthy of that accolade is Luca Pacioli, the man who published the first printed exposition of double entry bookkeeping in 1494. This was the publication that led to the development of the accounting systems we use today. However, if we consider our literature on Pacioli, it is found to be not just confusing and contradictory, but undecided as to who he was and what he did, or did not do. This paper addresses this ambiguity and uncertainty by adopting a critical hermeneutic analysis of the literature in order to present a more authentic perception of the life and works of Luca Pacioli. Archival discoveries of the past 20 years are embraced with Pacioli's own writings, and those of others who have sought to identify the man and his ambition. The view it reveals shows Pacioli as far more than the peripatetic friar and journeyman teacher of mathematics described in our literature; and it fills a much larger gap than the contradictions and confusion implied in our knowledge of the man who many consider to be the ‘father of accounting’.     

The evolution of China’s banking system: bank loan announcements 1996–2009

This study investigates China’s evolving banking systems from 1996 to 2009 by testing the market response to bank loan announcements in the China. The results show a significant negative market response to bank loan announcements in the Chinese financial market for the sample period 1996–2004. However, after a series of reforms in the Chinese banking system, the significantly negative market response to bank loan announcements disappears for the sample period 2005–2009.     

Accounting and Auditing Activities of the Ontario Securities Commission, 1960s to 2008 Part 3: The Fifth Chief Accountant, 1996–2008

We present Part 3 of a historical review and analysis of the role played by the Ontario Securities Commission (OSC) in accounting and auditing from the 1960s onward. Part 1 dealt with the period from the 1960s to 1985 (Zeff and Radcliffe, 2010a). Part 2 reviewed the work of the first four chief accountants, from 1986 to 1996 (Zeff and Radcliffe, 2010b). This third and final part reviews the work of the fifth chief accountant, John A. Carchrae, from 1996 to 2008. It began with the reorganization of the OSC and the reassignment of functions. The chief accountant position was now that of a permanent employee, albeit still as head of a very small department. The second part of Carchrae's tenure was dominated by the need to respond to the financial crises of the early 21^st century with extensive regulatory change as well as addressing the shift to international accounting standards in Canada.     

Housing markets and the financial crisis of 2007–2009: Lessons for the future

An unsustainable weakening of credit standards induced a US mortgage lending and housing bubble, whose consumption impact was amplified by innovations altering the collateral role of housing. In countries with more stable credit standards, any overshooting of construction and house prices owed more to traditional housing supply and demand factors. Housing collateral effects on consumption also varied, depending on the liquidity of housing wealth. Lessons for the future include recognizing the importance of financial innovation, regulation, housing policies, and global financial imbalances for fueling credit, construction, house price and consumption cycles that vary across countries.