| Course | ACC-6030 Accounting Theory |
|---|---|
| Module | Module 1 |
| Paper type | Written Assignment 1: accounting history |
| Length | About 739 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | M.S. in Management in Accounting |
| Updated | October 2026 |
Free sample paper for ACC 6030 Module 1
From Crash to Codification: Why the United States Leaves Accounting Rules to a Private Board
Student Name
M.S. in Management in Accounting, Thomas Edison State University
ACC-6030: Accounting Theory
Mentor Name
Month Day, Year
From Crash to Codification: Why the United States Leaves Accounting Rules to a Private Board
Introduction
Accounting rules in the United States are written by the Financial Accounting Standards Board, a private organization, even though the Securities and Exchange Commission has legal authority to set them. That arrangement was not designed in one step. It grew out of repeated attempts to answer a basic problem: who should decide how companies measure and report their results, and how can that body be both expert and independent? Schroeder et al. (2011) present the history as a sequence of institutions, each created to fix the weaknesses of the one before.
The Crash and the Securities Laws
Before 1929, financial reporting by U.S. companies was largely unregulated. Companies chose their own methods, revalued assets upward at will and disclosed little. The market collapse and the revelations that followed persuaded Congress that investors needed reliable information. The Securities Act of 1933 regulated new issues, and the Securities Exchange Act of 1934 created the SEC and gave it authority to prescribe the form and content of financial statements filed by public companies. Rather than writing detailed rules itself, the SEC in 1938 announced that it would accept statements prepared under principles with substantial authoritative support, effectively inviting the accounting profession to supply them.
The Committee on Accounting Procedure
The American Institute of Accountants responded with the Committee on Accounting Procedure, which issued 51 Accounting Research Bulletins between 1939 and 1959. The bulletins addressed problems one at a time and often permitted several methods for the same transaction, so comparability suffered. Critics argued that the committee lacked a theoretical foundation and that its part-time members, drawn from accounting firms, were too close to the clients whose practices they judged.
The Accounting Principles Board
In 1959 the profession replaced the committee with the Accounting Principles Board, which was meant to build standards on research. The APB issued 31 Opinions, but it never produced a conceptual foundation that won acceptance, and it became embroiled in political fights. The most damaging involved the investment tax credit in the early 1960s, when the APB required one accounting method and the SEC, under pressure from industry and government, accepted an alternative, undermining the board's authority. Disputes over business combinations and pooling later in the decade deepened the impression that the APB could not resist pressure from preparers (Zeff, 2003).
The Wheat Committee and the FASB
In 1971 the profession appointed a study group chaired by Francis Wheat, a former SEC commissioner. Its 1972 report recommended an independent, full-time board, separate from the AICPA, funded by a foundation with broad sponsorship and supported by a large research staff. The Financial Accounting Standards Board began operating in 1973 with seven full-time members who had to sever ties with their former employers. The FASB adopted a formal due process, with discussion memoranda, exposure drafts and public hearings, and in the late 1970s began its conceptual framework, the foundation the APB had lacked.
Sarbanes-Oxley and Beyond
The accounting scandals of 2001 and 2002 led Congress to pass the Sarbanes-Oxley Act, which recognized the FASB as the standard setter for public companies and replaced its voluntary funding with mandatory fees on public companies, reducing its dependence on contributions from the firms it regulated. In 2009 the FASB's Accounting Standards Codification reorganized thousands of pronouncements into a single topical structure that became the sole source of authoritative nongovernmental GAAP.
Why Standard Setting Stayed Private
Several reasons explain why Congress and the SEC have left standard setting with a private body. The SEC lacks the staff and technical depth to write detailed standards, while a full-time private board with due process can draw on preparers, auditors and users. Private standard setting also places some distance between accounting rules and elected officials, although that distance is limited: Congress pressed the FASB over stock option expensing in the 1990s and over fair value accounting in 2009. Zeff (2003) argues that the profession's credibility depended on showing that it could resist such pressure. The history suggests a pattern: each private body survived as long as it maintained independence and lost its role when it did not.
Conclusion
The U.S. standard-setting system is an evolving compromise between public authority and private expertise. The SEC holds the legal power, but each crisis, from 1929 to 2002, ended with the authority returned to a private body redesigned to be more independent than its predecessor.
References
Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2011). Financial accounting theory and analysis: Text and cases (10th ed.). John Wiley & Sons.
Zeff, S. A. (2003). How the U.S. accounting profession got where it is today: Part I. Accounting Horizons, 17(3), 189-205. https://doi.org/10.2308/acch.2003.17.3.189
Zeff, S. A. (2003). How the U.S. accounting profession got where it is today: Part I. Accounting Horizons, 17(3), 189-205. https://doi.org/10.2308/acch.2003.17.3.189
ACC 6030 Module 1 instructions, in plain terms
ACC-6030 grades ten written sets, one per module, at 50 percent in total, and adds ten discussions and a research paper of 10 to 12 pages. Written Assignment 1 covers Module 1, accounting history, using Schroeder, Clark and Cathey's Financial Accounting Theory and Analysis, whose chapters often end with cases and discussion questions. Expect questions on the development of accounting thought and institutions, the securities laws, the succession of U.S. standard setters and the reasons for their successes and failures. This sample is written as a short analytical paper; your prompt may instead ask several questions, and the same history applies.
How this ACC 6030 Module 1 example is built
The paper begins with the puzzle that drives the history: legal authority with the SEC, rule making with a private board. It then moves chronologically through five stages, each with the reason the institution was created and the reason it lost credibility, naming specific episodes such as the investment tax credit dispute. The Sarbanes-Oxley and codification section brings the story up to date. An analytical section explains why standard setting stayed private, with research by a leading accounting historian, and identifies the recurring pattern. The conclusion restates the compromise in one paragraph. Each stage of the history is linked to the problem that ended the previous body, so the paper explains causes rather than listing dates.
Reading the ACC 6030 Module 1 grading rubric
This history paper opens the ten written assignments that together carry half the ACC-6030 grade. On a history assignment, mentors look for an accurate sequence of institutions and dates, explanations of why each body was created and why it was replaced, and analysis that connects events to current arrangements rather than a timeline alone. Citing the textbook and scholarly history, and naming specific episodes, demonstrates depth. A chronology with no causes behind it, or a claim that the SEC drafts the standards itself, costs marks. Clear organization and APA citations complete the expectations. Accurate dates and bodies matter, but mentors reward the explanation of why each change happened more than the chronology itself. Linking the FASB's structure to the failures of its predecessors shows causal understanding.
ACC 6030 Module 1 help from the desk
History assignments in accounting theory often read like timelines. Organize around causes: what problem each body was created to solve and why it failed or survived. Check dates and names carefully, since the Committee on Accounting Procedure, the APB and the FASB are easy to confuse. Use specific episodes, such as the investment tax credit or stock option disputes, as evidence. Link the history to today's arrangements, including Sarbanes-Oxley funding and the Codification. Read each body's founding mandate before judging why it failed. A free first sample of your own ACC-6030 Module 1 paper is available on request.
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ACC 6030 Module 1 questions, answered
Where can I find a free ACC 6030 Module 1 sample paper?
The ACC-6030 accounting history paper is printed above: the securities laws, the CAP, the APB and its failures, the Wheat Committee, the FASB, Sarbanes-Oxley and why standard setting stayed private.
Why did the Accounting Principles Board fail?
It lacked an accepted conceptual foundation, its members were part-time and tied to accounting firms, and political disputes such as the investment tax credit undermined its authority.
What did the Wheat Committee recommend?
An independent, full-time standard-setting board separate from the AICPA, funded by a broadly sponsored foundation, which became the FASB in 1973.
Does the SEC set accounting standards?
The SEC has legal authority over public company reporting but has relied on private bodies, now the FASB, to set standards.
How did Sarbanes-Oxley affect the FASB?
It recognized the FASB as the standard setter for public companies and funded it through mandatory fees on public companies.