CHANGING NATURE OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
Generally accepted accounting principles are usually developed by professional accounting bodies like American Institute of Certified Public Accountants (AICPA) and Institute of Chartered Accountants of India(ICAI). In developing such principles, however, the accounting profession has to reflect the realities of social, economic, legal and political environment in which it operates. Besides academic research, regulatory and tax laws of the government e.g., Companies Act, 1956, income Tax Act, 1961 etc., in a large measure, influence the formulation of acceptable accounting principles. Stock exchanges and other regulatory agencies like Controller of Capital Issues (CCI) have laid down rules for disclosure and extent of accounting information.
Since the environment in which business operates, undergoes constant changes as a result of changes in economic and financial policies of the Government and changes in the structure of business, continued evaluation of the relevance of generally accepted accounting principles is required. In this sense, the principles of accounting are not ever-lasting truths. You will appreciate that it is the development of relevant accounting principles in tune with the present day needs of the society that would make it possible for the business enterprises to develop financial statements which would be acceptable and of value to the end users.
Now we give you a brief account of the development of standards in the United Kingdom, United States of America, India, and at the international level.
Thank you!
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