A CRITICAL ANALYSIS OF RESPONSES TO SELECTED FINANCIAL ACCOUNTING STANDARDS BOARD EXPOSURE DRAFTS TO DETERMINE THE IMPORTANT FACTORS RELEVANT TO ITS CONSTITUENCY (INCOME TAX, PENSIONS)

The standard setting process has been under critical scrutiny almost since its inception with standards changing frequently within short periods of time. The current standard setter, the Financial Accounting Standards Board (FASB), does not necessarily consider the responses given by its constituency nor abide by its own conceptual framework.; This research focused on the responses to three exposure drafts: "Accounting for Income Taxes," "Employer's Accounting for Pensions," and "Cost of Computer Software to Be Sold, Leased or Otherwise Marketed." The respondents' letters were coded using content analysis. A descriptive method was used to explain the frequency distributions developed for each exposure draft issue and for the various industry categories. Chi-square tests were performed for comparison between issues and industries.; Many variables were found that should be considered by the FASB in its due process. The asset-liability variable, which appeared in all frequency distributions, affects both net income and the balance sheet which deals with whether to expense or capitalize a cost. Some other variables of importance were: the overall view of the proposed statement; the completeness of disclosure required by the exposure draft; the complexity of calculations needed to obtain the information for financial reporting; the effective implementation date; the use of discounted amounts for items on the financial statements; and the workability of the statement in force at the time of the exposure draft. By using the variables found important in this research project, the FASB could developed an internal checklist to aid in writing the final statement, developing the exposure draft, or even before adding a topic to the agenda. Upon implementation of the checklist, the FASB could prevent continual revisions of the same standards.