Spent this morning listening to FASB debate some of the core issues for its Conceptual Framework, including:
Should FASB's objective focus on financial reporting, rather than only financial statements (yes, was general answer), and if so, does financial reporting need to be defined right away?
What exactly is a reporting entity? Is it the company (entity theory)? Is it the owners (proprietary theory?) Fortunately for me, several members of the board admitted to not having a good definition of the distinction, so perhaps I can come back to this another day.
Who are financial statements for? Who are their primary users? Is it current and potential investors and creditors? Should it be broader? Should it, for example, include government and regulatory bodies?
These are all meaty issues deserving better treatment than I can provide here, and we'll come back to them, I promise.
I was struck, however by the comments of Jim Leisenring at the end of this discussion, who said that "People who talk about reducing complexity [often use it as] a euphemism for 'Let's not have accounting standards.'" He added, "The real reason for accounting standards is to get comparable [statements]. I'm afraid we've lessened the importance of comparability." Now that's a topic we'll definitely come back to.
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