The Impact of Lobbying on Standard Setting in Accounting Essay

The Impact of Lobbying on Standard Setting in Accounting - Essay Example The essay "The Impact of Lobbying on Standard Setting in Accounting" discusses and critically evaluates the impact of lobbying on standard setting in accounting. Also, in the evaluation of the impact of lobbying on standard setting in accounting, various examples have been used to support the inferences that have been made. According to Frattini, lobbying on standard setting in accounting ensures that there are assurance and legitimacy among standard setters. The process of standard setting should be characterized by the provision of financial information, which will be acceptable and useful to all parties. Therefore, if a standard setter, especially a government body formulates measurement rules that are designated to support government policies, the integrity and credibility of the standard setter would be threatened, regardless of the fiscal merits of the measurement rules. As lobbyists pressure standard setters over the credibility of standards, the standard setters will seek to formulate accounting standards in an innovative manner. Since the parties that are affected by various accounting standards are diversified and there are no adequate conditions for guaranteeing the legitimacy and credibility of a standard, lobbying on standard setting in accounting becomes necessary. This is because ensuring procedural safeguards and inclusiveness in standard setting may be difficult. Standard setters they develop the best, possible accounting standards to secure acceptance of the standards by stakeholders. The conflict that may exist between the standard setters and stakeholders may be used strategically to influence legitimacy and credibility among accounting standard setters (McKay, 2006, p, 2). Therefore, lobbying on standard setting in accounting ensures that assurance and legitimacy among standard setters is enhanced. Lobbying and Revelation of Informatio n about Future Standards Implementation Lobbying on standard setting in accounting allows all the stakeholders to participate in the process of setting standards, and measures the interest about an issue. For instance, when some stakeholders oppose a particular accounting standard, they raise their concerns by advising the government and other interested parties to influence the amendment or removal of the standard (Godfrey & Chalmers, 2007 and Holgate, 2006). This means that more information about the controversial standard has to be provided by the relevant standard setter. Therefore, lobbying on standard setting in accounting reveals information pertaining to the potential implementation problems and costs of future standards (Frattini, 2007, p, 7). Companies and other stakeholders who will be affected by the accounting standa