The FASB's 1978-1983 Extraction Project: A Public Relations Nightmare

In late 1978, the Financial Accounting Standards Board (FASB) agreed to what became known as the extraction project—a project that would lead to the issuance of a standard a month over about a four-year period.  The objective was for the FASB to extract the important facets from previous pronouncements issued by American Institute of CPAs (AICPA) committees.  Most of the new standards were not really new—the FASB simply “rubberstamped” the standards that had already been promulgated by the AICPA.  The prolific number of standards issued led to a charge of standards overload.  Although the extraction project was blamed for an increase in standards overload, it is perhaps ironic to think that the Board itself saw the project at the beginning as a means to help control the proliferation of standards being issued by other bodies.  The result was a public relations nightmare as the FASB tried to justify the large number of new standards, while admitting there was nothing really new in those standards.  The extraction project served to clarify many areas of accounting standards, and served to defend the FASB’s turf, but the main result was criticism targeted at “standards overload.”  The large number of Statements issued over a short period of time caused an outcry among accountants that the Board was going too far too fast.