Answer
The chairman of the FASB was indicating that too much attention is put on the bottom line and not enough on the development of quality products. Managers should be less concerned with short term results and be more concerned with the long term results. In addition, short term tax benefits often lead to long term problems.
The second part of his comment relates to accountants being overly concerned with following a set of rules, so that if litigation ensues, they will be able to argue that they followed the rules exactly. The problem with this approach is that accountants want more and more rules with less reliance on professional judgment. Less professional judgment leads to inappropriate use of accounting procedures in difficult situations.
Work Step by Step
In the accountants’ defense, recent legal decisions have imposed vast new liability on accountants. The concept of accountant liability that has emerged in these cases is broad and expansive; the number of classes of people to whom the accountant is held responsible is almost limitless.
