Case 1-3: Politicalization of Accounting Standards

The original formation of accounting organizations came from the need to be more organized, with standards that would be followed by all companies with the idea of protecting the business and the stockholder. From this need the Committee on Accounting Procedure (CAP) was formed. This committee had the authority to issue pronouncements on accounting procedures with the idea of establishing generally accepted practices. This committee became more active after the release of the Securities and Exchange Commission's (SEC) ARS No. 4 which stated that reports filed with the SEC must be in accordance with those practices that have "substantial authoritative support,"