The FASB and Accounting for Economic Reality

2006 ◽  
Vol 6 (1) ◽  
pp. 1-21 ◽  
Author(s):  
Thomas A. Lee
Keyword(s):  
Conceptual Framework ◽  
Accounting Standards ◽  
Social Reality ◽  
Global Strategy ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Socially Constructed ◽  
Accounting Numbers ◽  
History Of ◽  
Economic Reality

The proposal by the Financial Accounting Standards Board (FASB) in 2002 to produce principles-based accounting standards is an explicit commitment to use its conceptual framework to improve financial accounting. In effect, it is a proposal to assist accounting for economic reality. However, an evaluation of the proposal and related FASB communications reveals a global strategy more concerned with achieving comparability and consistency than identifying improved ways of recognizing and representing socially-constructed reality by accounting numbers. The paper examines the philosophical notions of social reality and truthful correspondence in light of principles-based accounting standards and suggests that the FASB's superficial use of its conceptual framework in this respect is consistent with a history of conceptual frameworks as means of legitimating standard setting activities. As such, the FASB proposal would be no more than a short-term palliative to the long-term ills of financial accounting world-wide. The paper recommends a better understanding of the construction and representation of social reality by all concerned with the world of financial accounting.

FASB and Social Reality—An Alternate Realist View

2009 ◽  
Vol 9 (1) ◽  
pp. 39-64 ◽  
Author(s):  
Richard V. Mattessich
Keyword(s):  
Accounting Standards ◽  
Social Reality ◽  
Financial Accounting ◽  
Emergent Properties ◽  
Financial Accounting Standards Board ◽  
Specific Kind ◽  
Federal Debt ◽  
Economic Reality ◽  
The U.S ◽  
Realist View

ABSTRACT: This paper follows up on the discussion on “advising” the Financial Accounting Standards Board (FASB) about social and economic reality. It began with Lee (2006a), was commented upon in Macintosh (2006) and Williams (2006), and closed with a reply to both papers in Lee (2006b). All three authors criticized, in one way or another, the Financial Accounting Standards Board and the fashion in which it attempts to incorporate principle-based accounting standards into its conceptual framework (CF). The main thrust of these four papers is a critique directed toward the FASB, which has been more concerned with “comparability and consistency” than with “identifying improved ways of recognizing and representing social-constructed reality and truthful correspondence in the light of principle-based accounting standards” (Lee 2006a, 1). Thereby, Lee promotes Searle's (1995) theory of constructing social reality. The primary purpose of the current paper is to show that the methodology of the “onion model of reality” (OMR, developed in Mattessich 1991, 1995, and 2003) offers several advantages over Searle's (1995) approach. Above all, the results of the OMR are less confusing and much closer to accounting terminology as well as that of everyday language (e.g., saying: “The U.S. federal debt is a social reality,” instead of the cumbersome formulation: “The U.S. federal debt is ontologically subjective”—the text discusses additional advantages of the OMR). The backbone of the OMR is the fact that each reality level is endowed with its very own emergent properties, hence with its specific kind of reality.

scholarly journals Ontwikkelingen in het conceptual framework

2013 ◽  
Vol 87 (9) ◽  
pp. 355-364
Author(s):  
Dick Van Offeren ◽  
Joop Witjes ◽  
Tim Verdoes
Keyword(s):  
Conceptual Framework ◽  
Financial Reporting ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Reporting Framework ◽  
International Accounting Standards Board

De International Accounting Standards Board (IASB) heeft recent het conceptual framework-project als kernproject aangemerkt. Het oorspronkelijke Framework for the preparation and presentation of financial statements (framework 1989) was aan een fundamentele herziening toe. Samen met de Financial Accounting Standards Board (FASB) heeft de IASB de eerste fase van het Conceptual framework for financial reporting (framework 2010) voltooid. In deze eerste fase worden twee onderwerpen besproken. Dit zijn het doel van financiële verslaggeving en de kwalitatieve kenmerken van financiële verslaggeving. Wij bespreken deze twee onderwerpen en gaan in op de verschillen tussen het framework 2010 en het framework 1989. Wij benadrukken het verschil in toepassingsgebied van de twee frameworks. Het framework 2010 is gericht op het ruimere begrip financial reporting, financiële verslaggeving en het framework 1989 was beperkt tot financial statements, jaarrekeningen.

scholarly journals Impact Of IASB & FASB On Financial Statements

2011 ◽  
Vol 8 (8) ◽  
Author(s):  
Veronica Paz ◽  
Thomas Griffin
Keyword(s):  
Conceptual Framework ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
The Impact ◽  
International Accounting Standards Board

The purpose of this research is to determine the impact of material differences in the conceptual framework of the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) on the financial statements.

The Accounting Standard-Setting Due Process, Corporate Consensus, and FASB Responsiveness: Employers' Accounting for Pensions

1995 ◽  
Vol 10 (3) ◽  
pp. 555-564 ◽  
Author(s):  
Georgia R. Saemann
Keyword(s):  
Conceptual Framework ◽  
Due Process ◽  
Accounting Standards ◽  
Standard Setting ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Accounting Standard ◽  
Accounting Standard Setting

The Financial Accounting Standards Board (FASB) uses a due process to ascertain the views of its constituents and to build consensus while setting standards based on a sound conceptual framework. This study examines the responsiveness of the FASB and its success in building consensus among corporations in the due process on Employers' Accounting for Pensions. The findings indicate that the FASB is influenced by the number of opposing comments filed by its corporate constituents. Further, there is evidence that consensus was built throughout the due process for the highly controversial standard.

A HISTORY OF POOLING OF INTERESTS ACCOUNTING FOR BUSINESS COMBINATIONS IN THE UNITED STATES

1991 ◽  
Vol 18 (2) ◽  
pp. 155-192 ◽  
Author(s):  
Frank R. Rayburn ◽  
Ollie S. Powers
Keyword(s):  
Accounting Standards ◽  
The United States ◽  
Securities And Exchange Commission ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Business Combinations ◽  
Accounting Principles ◽  
History Of ◽  
Business Combination ◽  
The Subject

This paper traces the development of pooling of interests accounting for business combinations from 1945 to 1991. The history of the pooling concept is reviewed chronologically with particular emphasis on the events of 1969–1970 that were related to the most recent pronouncement on the subject, Accounting Principles Board (APB) Opinion No. 16. Early in its life (1974), the Financial Accounting Standards Board (FASB) placed a project on its agenda to reconsider pooling of interests accounting. That project was removed from the FASB's agenda in 1981. APB Opinion No. 16 has gone essentially unchanged as it relates to the accounting for a business combination as a pooling of interests. Resolution of implementation issues has been left largely to the Securities and Exchange Commission and the accounting profession. The FASB has a project on its agenda on Consolidations and Related Matters that may impact pooling of interests accounting. There also is some pressure for the FASB to revisit accounting for business combinations.

The FASB's Dissenting Opinions

2015 ◽  
Vol 29 (2) ◽  
pp. 363-375 ◽  
Author(s):  
Michael E. Bradbury ◽  
Julie A. Harrison
Keyword(s):  
Content Analysis ◽  
Conceptual Framework ◽  
Due Process ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Research And Practice ◽  
Before And After ◽  
Over Time

SYNOPSIS This paper provides a commentary on the results of a content analysis of dissenting opinions in Financial Accounting Standards Board (FASB) standards. During 1973 to 2009 the FASB issued 171 financial accounting standards. Half of these standards contained dissenting opinions. We identify and classify dissenting opinions based on whether the arguments are conceptual (conceptual framework-related or non-framework-related) or non-conceptual (e.g., scope, due process). We examine whether the types and frequencies of arguments change over time in response to the development of the FASB's conceptual framework and provide a commentary on the role of these opinions and the usefulness of analyzing them for research and practice. Our main finding from our analysis is that conceptual arguments are the most frequently used in the dissenting opinions, both before and after the introduction of the conceptual framework. However, of note is that many of the arguments raised, while conceptual in nature, are not from the conceptual framework. We suggest this indicates either a need for the conceptual framework language to be more widely used by the authors of dissenting opinions and/or the emergence of new conceptual arguments that may be relevant for future revisions of the conceptual framework.

scholarly journals An analysis of fundamental concepts in the conceptual framework using ontology technologies

2014 ◽  
Vol 17 (4) ◽  
pp. 396-411 ◽  
Author(s):  
Marthinus Cornelius Gerber ◽  
Aurona Jacoba Gerber ◽  
Alta Van der Merwe
Keyword(s):  
Conceptual Framework ◽  
Financial Reporting ◽  
Formal Language ◽  
Design Science ◽  
Accounting Standards ◽  
Science Research ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Reporting Practices ◽  
Financial Reporting Standards

The interpretation of financial data obtained from the accounting process for reporting purposes is regulated by financial accounting standards (FAS). The history and mechanisms used for the development of ʻThe Conceptual Framework for Financial Reporting’ (the Conceptual Framework) as well as the financial accounting standards resulted in impressive volumes of material that guides modern financial reporting practices, but unfortunately, as is often the case with textual manuscripts, it contains descriptions that are vague, inconsistent or ambiguous. As part of the on-going initiatives to improve International Financial Reporting Standards (IFRS), the International Accounting Standards Board (IASB) promotes the development of principle-based IFRS, which aim to address the problems of vagueness, inconsistency and ambiguity. This paper reports on the findings of a design science research (DSR) project that, as artefact, developed a first version ontology-based formal language representing the definitions of asset, liability and equity (the fundamental elements of the statement of financial position as defined in the Conceptual Framework) through the application of knowledge representation (ontology) techniques as used within computing. We suggest that this artefact may assist with addressing vagueness, inconsistencies and ambiguities within the definitions of the Conceptual Framework. Based on our findings, we include suggestions for the further development of a formal language and approach to assist the formulation of the Conceptual Framework. The project focuses on the Conceptual Framework for Financial Reporting after the incorporation of Phase A in the convergence project between the Financial Accounting Standards Board (FASB) and IASB.

scholarly journals Accounting for Stock Options

2005 ◽  
Vol 19 (4) ◽  
pp. 115-134 ◽  
Author(s):  
Jeremy Bulow ◽  
John B Shoven
Keyword(s):  
Stock Options ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
Financial Statement ◽  
Financial Accounting Standards Board ◽  
Public Companies ◽  
Valuation Method ◽  
History Of ◽  
Reported Earnings

As public companies begin their new fiscal years, they are implementing a new and controversial Financial Accounting Standards Board (FASB, 2004) proposal for expensing stock options. Applied to 2003 and 2004, this rule would have slashed reported earnings of the Standard & Poor's 500 by 8.6 and 7.4 percent; the effect in the bubble years would have been more than twice as large. We describe the history of how these options have been expensed for financial statement purposes. We assess the new FASB approach and find that it is deeply flawed. The main purpose of the paper is to describe an alternative options expense valuation method, the Bulow-Shoven approach, that addresses these problems. Our approach is simpler than the new FASB methodology, less prone to earnings manipulation and more consistent with the way the rest of compensation is treated in financial statements.

THE EVOLUTION OF THE CONCEPTUAL FRAMEWORK FOR BUSINESS ENTERPRISES IN THE UNITED STATES

1999 ◽  
Vol 26 (2) ◽  
pp. 89-131 ◽  
Author(s):  
Stephen A. Zeff
Keyword(s):  
United States ◽  
Conceptual Framework ◽  
Accounting Standards ◽  
The United States ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
American Institute ◽  
Decision Usefulness ◽  
Business Enterprises ◽  
The U.S

Institutional efforts in the U.S. to develop a conceptual framework for business enterprises can be traced to the Paton and Littleton monograph in 1940 and later to the two Accounting Research Studies by Moonitz and Sprouse in 1962–1963. A committee of the American Accounting Association issued an influential report in which it advocated a “decision usefulness” approach in 1966, which was carried forward in 1973 by the report of the American Institute of CPAs' Trueblood Committee. All of this laid the groundwork for the conceptual framework project of the Financial Accounting Standards Board (FASB), which published six concepts statements between 1978 and 1985. A seventh concepts statement is likely to be published in 2000. It is still not clear how the FASB's conceptual framework has influenced the setting of accounting standards, and some academic commentators are skeptical of the usefulness of all normative conceptual framework projects.

The Influence of Accounting Theory on the FASB Conceptual Framework

2017 ◽  
Vol 44 (2) ◽  
pp. 109-124 ◽  
Author(s):  
C. Richard Baker
Keyword(s):  
United States ◽  
Conceptual Framework ◽  
20Th Century ◽  
Accounting Standards ◽  
The United States ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Accounting Practice ◽  
Accounting Theory ◽  
Primary Basis

ABSTRACT During the first half of the 20th century, “accounting theory” developed primarily by accounting scholars and academics provided the primary basis for the practice and teaching of financial accounting in the United States. Since the creation of the Financial Accounting Standards Board (FASB) in the early 1970s, the FASB Conceptual Framework has provided the primary basis for accounting standards-setting, as well as for the practice and teaching of financial accounting. While the purpose of creating a Conceptual Framework has been to develop an agreed-upon set of concepts and principles to guide accounting standards-setting, a related goal has been to reduce diversity in accounting practice and to move toward greater uniformity. This paper traces the influence of accounting theory on the Conceptual Framework and explores some of the consequences of this influence.

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