Reporting Performance: Comprehensive Income and its Components

Abstract

The underlying question raised in this article is: why is the accounting profession's conceptual framework (CF) so authoritative when it is conceptually incoherent? A supplementary question is how can 'conceptually robust' accounting standards be derived from an incoherent framework? This article draws on Page and Spira's (1999) contrasting framework metaphors to suggest that the appearance of conceptual robustness is more important than the reality, and illustrates the point with the International Accounting Standards Board's (IASB's) progress report on its reporting performance project. Some inherent weaknesses in the move towards internationally enforceable financial regulations have been acknowledged, but this article suggests the IASB's project demonstrates two additional weaknesses: internal incoherence, and the potential for political ends to drive supposedly technical regulations.

Will the changes proposed to the conceptual framework's definitions and recognition criteria provide a better basis for IASB standard setting?

“…Walker (2003) also notes that the CF development process can be aimed at legitimising existing standards. Newberry (2003) believes that a coherent up-to-date CF and accounting standards that are developed consistently with it, should not be expected, given the continuously changing reporting environment and political influence. She holds that the IASB uses bits and pieces from an incoherent CF to justify individual standard setting decisions, and that the IASB does not necessarily strive for coherence and consistency.…”

“…Watts and Zimmerman (1979) are of the view that, as a result of the political process, rationales will differ across accounting standards. It also provides room for justification of individual standard-setting decisions using bits and pieces from an incoherent CFas described by Newberry (2003). The IASB discusses comparability as an enhancing qualitative characteristic in the CF, but does not identify consistency between IFRSs as an objective, qualitative characteristic or requirement, and thus leaves room for decision-making about relevance and faithful representation on a standard-by-standard basis.…”

Reddito complessivo, teoria dell'entità o concetto di entità? teoria delle entità o concetto di entità?

“…Questa apertura è importante soprattutto rispetto all'interpretazione del concetto di fair value, poiché ammette altre interpretazioni non convenzionalmente accettate, quali il valore corrente come valore attuale. Una parte crescente della dottrina (Cheng et al, 1993;Dhaliwal, Subramanyam e Trezevant, 1999;Newberry, 2003;Kothari, Leone e Wasley 2005;Biddle e Choi, 2006;Ernstberger, 2008;Barton et al, 2010, e così via) considera sempre meno attendibile il prezzo di mercato, poiché per taluni scenari non riesce a dare espressione a tutte quelle immaterialità, non contabilizzate, che rendono equo, fair appunto, il concetto di valore, permettendo l'emersione dei plusvalori sommersi. In molte circostanze, gli stessi standard setter 10 precisano che è impossibile estendere l'approccio a valori correnti a tutti gli elementi del bilancio; un prezzo di mercato spesso non esiste, o non è facilmente tracciato o può essere stimato solamente se è indicato il valore futuro di realizzazione.…”

Differentiating Brand Assets from Goodwill Assets: The Artefact Based Approach to the Accounting Recognition of Marketing Related Assets

“…This would, in principle (but only in principle), include brand assets. And so there appears to be a recent general move towards the related notion of recording 'comprehensive income' (Bertoni and De Rosa, 2005;Cauwenberge and De Beelde, 2007;IASB, 2003;Newberry, 2003;Barker, 2004) between two balance sheet dates. This notion is grounded on Hicksian economics (Hicks, 1946, pp178-9): changes in wealth plus what is consumed in a period.…”