Premium Essay

A Framework for Financial Reporting Standards: Issues and a Suggested Model

In: Business and Management

Submitted By jingma
Words 9116
Pages 37
Accounting Horizons
Vol. 24, No. 3
2010
pp. 471–485

American Accounting Association
DOI: 10.2308/acch.2010.24.3.471

COMMENTARY

A Framework for Financial Reporting
Standards: Issues and a Suggested Model
American Accounting Association’s Financial Accounting Standards
Committee (AAA FASC)
James A. Ohlson, Stephen Penman, Robert Bloomfield,
Theodore E. Christensen, Robert Colson, Karim Jamal, Stephen Moehrle,
Gary Previts, Thomas Stober, Shyam Sunder, and Ross L. Watts
SYNOPSIS: This paper addresses the issues that confront the FASB and IASB in developing a new conceptual framework document. First, we suggest characteristics that a conceptual framework ought to exhibit. Most of these suggestions are based on our critique of the existing framework and the FASB-IASB work in progress. Second, we present a model framework that exhibits these characteristics. We emphasize up front that this framework is quite explicit. It goes to the heart of what a framework document should do: it places specific restrictions on what constitutes admissible accounting standards. The purpose of our effort is to stimulate broad discussion of alternative approaches to foundational documents and to offer a specific example of such an alternative approach.
Keywords: FASB; IASB; conceptual framework; accounting standards; financial reporting. JEL Classifications: M40.

In 2008, the American Accounting Association’s Executive Committee asked the Financial Accounting Standards Committee ͑hereafter, the Committee͒ to develop alternative approaches to conceptual frameworks for financial reporting standards. The Committee agreed to add this assignment to its normal tasks of commenting on financial reporting proposals from standard setters and regulators. As a consequence of discussions about how to fulfill this assignment, the Committee determined that it would periodically

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