CHANGES IN ACCOUNTING PROCEDURES

This research considers changes made in accounting procedures by four firms. Both the nature and the effects of these changes are discussed. The Accounting Practice Board (APB) Opinion 20 holds that a change in accounting procedures initiated by a firm is not justifiable unless a firm can demonstrate that such a change involves the use of an alternative procedure that is clearly preferable in the context of fair and accurate financial reporting. Such a change in accounting procedures might, as an example, involve a change in the method for the valuation of inventory from FIFO (first-in-first-out) to LIFO (last-in-first-out). This type of change would not only require a justification of desirability on the part of the firm, but would also require the approval of the Internal Revenue Service (IRS).

In other instances, changes in accounting procedures may be prompted by changes in law which provide firms with opportunities previously unavailable. As an example, a legal ruling that some retirement fund assets are the property of the funding firm enabled some firms to change accounting procedures in order to recognize income on the earnings of such assets. In yet other instances, the federal government may mandate actions on the part of firms that require accounting changes. An example of a mandated action requiring an accounting change was the federal requirement implemented in 1992 requiring that

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op floor and flexibility in cost accounting practices because many traditional features of the manufacturing process must be eliminated. The characteristics that must be eliminated are as follows: 1. WIP is eliminated by reducing batch sizes (preferably to just one). 2. Raw materials inventories are eliminated by requiring suppliers to deliver directly to the shop floor just-in-time for use in the manufacturing process. 3. Scrap and rework are eliminated by an emphasis on total quality control of design, the manufacturing process, and materials. 4. Finished goods inventories are eliminated by reducing lead times, so that, in effect, all products are made to order. 5. Materials handling costs are eliminated by redesign of the shop floor to permit materials to move directly between adjacent work centers. Major changes in cost accounting procedures for manufacturing firms are dictated in 10 separate areas by the introduction of JIT: 1. Collection of costs against work orders. When batch sizes are reduced, the number of batches processed increases. When this situation occurs, it is no longer possible to collect costs against work orders for individual batches. 2. Collection of materials costs. With materials
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Some common words found in the essay are:
Just-in-Time JIT, Change IBM, Change Motors, Engineering Corp, Hewlett-Packard Corp, Service IRS, Stone Webster, APB Opinion, accounting change, Management Accounting, EXAMPLES Introduction, accounting procedures, financial reporting, health benefits, manufacturing management, shop floor, change accounting, lead times, improved financial reporting, earnings share, future health, accounting change opinion, opinion reviewer lead, reviewer lead improved, change opinion reviewer,
Approximate Word count = 1943
Approximate Pages = 8 (250 words per page)

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