Stock Market Crash Of 1929

The increasing politicalization such as the Security and Exchange Commission (SEC) is the cause for the demise of the Committee on Accounting Procedure (CAP) of the AICPA and the Accounting Principle Board. When the stock market crashed in 1929, many of investors lost their life savings in the market crash. “There is a generally held opinion that accounting practices of the 1920s contributed to the stock market crash of 1929” (Roberts, (2011, para. 2). The accounting regulations emerged immediately after the crash, and the Securities Act of 1934 organization has proceeded to set accounting standards, while providing supervision to auditing and accounting firms. The 1934 act also developed the SEC, which Congress gave it both the power and responsibility
for setting accounting and reporting standards for companies.
Because of the CAP lack of ability to the development of generally accepted accounting principles when the needs of regulation increasing for accounting practices, the Accounting Principles Board (APB) replaced The CAP in 1959. CAP issued 51 Accounting Research Bulletins (Kieso, Weygandt & Warfield, 2014, p. 9), which resolved specific accounting and reporting problems, and lately become well known as Generally Accepted Accounting Principles (GAAP). The APB operated 14 years and issued 31 opinions (Kieso, Weygandt & Warfield, 2014, p. 9). Unfortunately, The APB could not accomplished to develop a higher set of standards, which led to the creation of the Financial Accounting Standards Board (FASB) in 1972. The FASB is currently recognized as the authoritative body for “establish and improve standards of financial accounting and reporting for the guidance and education of the public, which includes the issuers, auditors, and the users of ffinancial information” (Kieso, Weygandt & Warfield, 2014, p. 10).
In conclusion, the evolution of the current FASB definitely does represent increasing politicization of accounting standard setting (Schroeder, Clark & Cathey, 2010, p. 15)