Answer
Endeavoring to set standards by a political procedure will likely prompt the following outcomes:
(a) Too numerous choices.
(b) Lack of clearness that will prompt conflicting application.
(c) Lack of revelation that diminishes straightforwardness.
(d) Lack of comprehensiveness from a scope perspective.
Without an independent procedure, standards will be founded on a political bargain — a classic illustration of what occurred in the banking industry. Applying accepted accounting rules to the banking industry would have forced controllers to limit numerous banks and financial institutions. Lamentably, accounting standards were superseded by administrative guidelines, and the subsequent absence of transparency concealed the issues. William Seidman, previous FDIC Chairman, noted later that it was "the ugliest mistake in government history."
Work Step by Step
Another sign of the issue of government intercession is depicted in the accounting standards utilized by a few nations around the globe. Fulfillment and transparency of data required by financial specialists and lenders isn't accessible so as to meet or accomplish other goals.
