Various accounting standards have produced far-reaching economic consequences. This was demonstrated by the Financial Accounting Standards Board (FASB) in addressing such issues as restructuring costs, financial instruments and fair value accounting, stock options, and post-employment benefits. Various difficulties sometimes arise in the proper accounting for the economic substance of a transaction within the current accounting framework.
Since financial statements must conform to generally accepted accounting principles, the standard-setting bodies, such as the FASB or the GASB (Governmental Accounting Standards Board), will conduct research on the economic impact of a proposed standard. For example, the handling of off-balance-sheet transactions has at times encouraged the selection of one business decision over another, producing results that may be less oriented to the users of financial statements.
In today's complex business and legal environment, the researcher conducting accounting and auditing research should understand the economic and social impacts that various accepted accounting alternatives may have on society in general and the individual entity in particular. Such economic and social concerns are becoming a greater factor in the evaluation and issuance of new accounting standards.