how can accounting standard setting be a political issue?

Answer 1

Do you know how the process works? The board asks for opinions. Everyone can chime in. Of course, only certain groups care so they push their political agendas for why they want a certain standard.

It's a balancing act btw letting what the industry wants, and not going too far as to give the gov't an excuse and take away the self regulating ability completely.

Answer 2

Accounting Standards can affect the profitability of a corporation and the tax revenue of the government. Examples could include acceptable depreciation schedules, investment tax credits, business travel allowance definitions, and the "in the news" executive stock option grant dating. Accounting standards also affect the transparency of the financial operation of public entities such as state universities and government departments so that the elected officials can see or have hidden any questionable use of allocated funds for borderline "pork" projects that may only be tangentially related to the mission of the department. Expenditures on entertainment, vehicle usage, capital property disposal, and athletic programs are examples of the many areas of potential misuse of funds that might be hidden if the accounting standards are lax. The politicians who benefit (or whose supporters benefit) will oppose strict accounting standards while those who don't will be in favor of them.