Three models for setting accounting standards follow:
1. The purely political approach, where national legislative action decrees accounting standards
2. The private, professional approach, where financial accounting standards are set and enforced by private, professional actions only
3. The public/private mixed approach, where standards are set by private sector bodies that behave as though they were public agencies and the standards are mostly enforced through government agencies
Instructions
(a) Which of these three models best describes standard setting in Canada? Explain your choice.
(b) Why are companies, financial analysts, labour unions, industry trade associations, and others actively interested in standard setting?
(c) Cite an example of a group other than the AcSB that tries to establish accounting standard. Speculate on why such a group might want to set its own standards.