A Critical Examination of State Regulation of Accounting

Stianle Siegel analyzes the manner in which state law addresses issues of accounting principles. He uses corporate asset distributions to illustrate how state laws do not properly define accounting concepts. The resulting ambiguity in determininhg appropriate accounting principles makes it difficult for the corporate planner to ascertain when a distribution is proper. Conceding that Generally Accepted Accounting Principles are constantly changing, tie author points out that they represent a narrower class of variability than current state law. The article concludes by recommending that state law incorporate GAAP on a selective basis.