Situation have also been identified with accounting standard overload :Too many standardToo detailed standardNo rigid standard, making selectivity of application difficultGeneral purpose standards failing to provide for differencesExcessive diclosures, complex measurement, or both

Financial reporting should provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similiar decisions. The information should be comprehensible to those who have a reasonable understanding of business and economic activities and are willing to study the information with reasonable diligence

The large number, narrowness and rigidity of accounting standards can have serious effect on the work performed by accountants, the value of financial information to users and business decisions made by management. The accountants may lose sight of their real jobs because of the excessive data required when complying with existing standards. Audit failures may result, because the accountant may lose the focus of the audit and may forget to perform basic audit procedures.

The AICPA Special Comittee on Accounting Standards evaluated the following possible approaches to dealing with accounting standards overload :1.No change; retain status quo2.A change from present concept of set of unitary GAAP for all business enterprises to two sets of GAAP, thus creating a separate set of GAAP for certain entities, such as small nonpublic business3.Changes in GAAP to simplify application to all business enterprises4.Establishing differential disclosure and measurement alternatives5.A change in CPA’s standards for reporting on financial statements6.An alternative to the GAAP as an optional basis for presenting financial statements.

The approach that relies on an alternative to the GAAP rests on three possibilities :1.A new basis accounting method (BAM)2.The cash or modified cash basis3.The income tax basis