In this competitive business world, the importance of having a certain set of accounting standards is immense for complete accuracy, reliability and clarity of financial information. The trading community is growing rapidly, which requires less earnings management within the company, timely loss recognition, systematic performance and increased value relevance. Therefore it is necessary to apply accounting principles in favor of businesses. And here comes the term “lobbying” which is widely common in setting accounting standards. Knowing the term "lobbying" in accounting, many researchers have formulated different points of view, "all actions that interested parties take to influence the regulatory body." The response of those affected by financial accounting standards to new accounting rules, and the efforts of individuals and organizations to promote or hinder such rules are collectively described as lobbying, that is, the systematic steps that interested parties take to influence setting bodies of standards. Anyone affected by such regulations will try to convince lawmakers to write the rules to their advantage. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay International accounting bodies such as IASC and IASB set accounting standards for us. One of the objectives of the International Accounting Standards Committee (IASC), and its successor body, the International Accounting Standards Board (IASB), is to develop a set of high-quality, internationally acceptable financial reporting standards. Financial reporting is considered a public good. Many stakeholders have an interest in companies being very particular about reporting their financial information. The IASC and IASB have issued principles-based standards and taken steps to eliminate permitted accounting alternatives and to require accounting measures that better reflect an enterprise's economic position and performance. If we consider that the standard is set only by the regulatory body, then this is not true. Every standard is set as a result of collective influence. Standards bodies are seen as part of an “accounting world” in which voters and lobbyists interact with the standard-setting body to shape the outcome of the regulatory process. Along with users of financial statements, there are other potential groups of parties also influencing the standard-setting process: preparers of financial statements; auditing firm; professional accounting bodies; European accounting standards bodies and EFRAG; FASB; US Securities and Exchange Commission (SEC); European governments and the European Commission; eAcademics.Most accounting professionals are the former group in influencing the accounting standard-setting process. It has therefore been felt that accountants can govern better than any other person in setting standards. As the Company's internal accountants are confined within preset standards. So sometimes they struggle in uncertainty. While external accountants or large accounting firms are associated with various companies throughout the year, they therefore have adequate data on the common issues faced by such companies. This helps them to take an active part in the standard-setting process. This seems to be consistent with what was stated in his article entitled "The process of setting standards IASB", some users perceive the setting of accounting standards as the task ofaccountants. In support of this he also mentioned that the participation of an investment management company in lobbying activities is relatively low compared to any other interest group. Watts and Zimmerman suggest that management compensation, information production costs, regulation, taxes, and political costs are factors that influence a Despite the manager's decision to lobby on accounting issues, political influence in setting standards Accounting has been a practice since the beginning. An article by Sutton entitled A DOWNSIAN ANALYSIS shows how the setting of financial accounting standards in the UK and US has a political influence on it. The IASB has a reputation as a private standard-setter around the world. Its standards are developed through lengthy public consultation procedures that may include field testing, calls for comment on draft exhibits, public roundtables, and public hearings. Setting such standards is a political process in which interest groups exert pressure to influence wealth transfers. Over the years, the size of the company has been one of the reasons behind lobbying for accounting standards in the UK. Big businesses cannot escape the political costs that have always weighed on them. Therefore, lobbying in the setting of accounting standards would bring them significant benefits. Because of the size of these companies, they are considered resourceful in influencing accounting standard-setting bodies. According to Georgiou, previous studies have consistently found that size is positively related to the firm's participation in the standard-setting process. There are some contracts that companies enter into for debt repayment. If they breach these contracts in any way, they may not incur further debt and this may lead to the future sale of their assets to repay those debts. Therefore, according to companies that are closer to the limits set by their covenants, they are likely to have a greater interest and consequently a greater level of involvement in the accounting standard setting process than other companies. As we know, financial accounting standards are not law but they are as powerful as the law. At best, they limit the choice of accounting methods available to management. At worst, they force companies to report financial information in a form that companies would not have voluntarily chosen. It is true that financial standards may not be favorable to all parties due to varying types of companies and ways of operating. Among many other accounting standard-setting lobbying processes, due process is one of them. The Australian due process, established by the Accounting Standards Review Board and the Public Sector Accounting Standards Board, is a legitimate process for accounting standards. 'advancement and statement of accounting standards'. Stakeholders can apply pressure by proposing a standard to be approved, they can follow a formal channel, submit comments on the published ED or participate in an open hearing by standard setters. There are several methods that influencers follow to exert pressure. How direct, indirect and formal, informal. And there are many steps to carry out this process (Georgiou, 2010) mentioned six systematic stages of this process implemented by the IASB. These are as follows: The first 3 initial stages: Agenda, Drafting of the discussion document and Exposure of the discussion document The last three final phases: Drafting of the ExposureDraft, Exposition of the Exposure Draft and Drafting of the IFRS Lobbying is more effective in the period of exposure of the discussion document than in the agenda and regarding the perceived effectiveness of lobbying, companies that lobbied the ASB have considered lobbying more effective than companies that did not do so. In explaining the 'due process' of setting Australian standards and examining how lobbying was carried out in Influencing the regulator there was a case study on the 49 Accounting for Identifying Exposure Draft Intangible Assets (ED49). Tutticci, Dunstan and Holmes specified that ED49 was issued during the mandate of the ASRB. Stakeholders had the opportunity to lobby through formal channels by contributing a proposed standard for approval, submitting comments on published exposure drafts, or participating in public hearings held by standard setters. Given the existence of due process, shareholders, preparers, managers and auditors who are financially upset by the introduction of a proposalThe standard is expected to use due process in an attempt to impact data controllers. ED49's proposals would have limited current accounting choices and altered reported accounting numbers. On the other hand, a significant finding of the study concerns the reasons for not taking part in the process, namely the cost of lobbying. So, it was mentioned above, how the size of the company influences the lobbying process. Sometimes interested companies form groups to take part in the process due to the high potential cost associated with it. However, companies do not see the cost of lobbying as a significant reason for not engaging with the process. Along with many successful lobbying cases, Sutton also demonstrated some unsuccessful post-exposure lobbying projects: such as lease standards (FAS 13 and related schedules) and deferred taxation (APBO 11). Because many lobbying groups had been formed, the power of lobbyists outraged each other, which ultimately led to null results and an unsuccessful post-exposure draft. According to Giner and Arce Lobbying activity before the adoption of IFRS 2. that is, the consideration of share transactions as a cost in February 2004 was actually carried out through public letters of comment from interested parties. Financial statement preparers received more responses to the ED than any other affected group. Here lobbying was based on the public choice framework. The accounting for oil companies is drawn up by none other than themselves. These oil companies spend an absolute fortune on drilling and extraction activities, so somehow they have caught the US regulatory body. Extractive industries hold a significant share of the world's capital. And in their standard-setting process, there is a great influence of invisible power. In the formulation of IFRS6, i.e. the exploration and evaluation of mineral resources, Cortese and Irvine mentioned in their study the existence of a black box in which powerful extractive industries used to influence the IASB under the veil to ensure their requirements. In the mining industry, pre-production activities are quite expensive, therefore two methods were used. Please note: this is just an example. Get a custom paper from our expert writers now. Get a Custom Essay The Full Cost Method: Includes all costs involved in unsuccessful draws The Success Method includes all.