Tracing the Development of a Conceptual Framework of Accounting a Western European and North American Linkage: A Partial Examination

Salvary, Stanley

doi:10.2139/ssrn.687984

Cited by 4 publications

(8 citation statements)

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“…Watershed developments in GPFR have been responses to the prevailing socio‐economic environment (Salvary, ; Dean and Clarke, ; Dean, ). Subsequent to its nineteenth century origins in the UK, key developments in GPFR have tended to occur in the US, as that nation came to assume dominant economic status.…”

Section: The Essential Features Of Coherent Theoretical Development: mentioning

confidence: 99%

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The Purpose of Financial Reporting: The Case for Coherence in the Conceptual Framework and Standards

Sutton

Cordery

Zijl

2015

Abacus

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This paper proposes a basis for progress in the development of the conceptual framework (CF) as a foundation for developing accounting standards. This topic has gained increased prominence following the IASB's (2013) release of its Review of the Conceptual Framework for Financial Reporting (RCFFR) proposing changes to the CF. In this paper the broad socio-economic environment is seen as determining the primary purpose of General Purpose Financial Reporting (GPFR), which, in turn, establishes the high-level properties of a CF suitable to meet that primary purpose. This is to support market stability and efficiency through the provision of an account of the financial position and performance of an entity that accords with economic reality.The case is made that the primary purpose of a CF is to provide the principles for the development of accounting standards that will result in GPFR that is useful. This requires theoretical coherence. The CF should drive the standards and if standards depart from the CF principles, such departures should be justified. This proposal is consistent with the position adopted in the RCFFR. However, in contrast to the RCFFR, this paper accents the purposive approach and links the formation of standards directly to the CF. This approach implies that standards are subordinate to CF principles; therefore compliance with standards should not provide a basis for compromising the faithful representation of economic reality. From the purpose identified for GPFR, the paper argues for a default presumption in favour of Fair Value Accounting, a retreat from the asset/ liability approach, and a re-casting of the income statement to focus on operational flows.

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Section: The Essential Features Of Coherent Theoretical Development: mentioning

confidence: 99%

“…The central theme underpinning the development of GPFR is that it has been reactive to economic and financial market upheavals (Salvary, ; Wells, ; Dean and Clarke, ). As noted, such breakdowns have had widespread spill‐over effects on society.…”

Section: The Essential Features Of Coherent Theoretical Development: mentioning

confidence: 99%

The Purpose of Financial Reporting: The Case for Coherence in the Conceptual Framework and Standards

Sutton

Cordery

Zijl

2015

Abacus

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“…It is identifiable as a discrete legal entity established to aggregate capital contributions to be applied to a singular objective (Enthoven, 1973;Clarke and Dean, 1993;Giroux, 1999). This objective may have myriad components, operate in multifarious businesses, and periodically prioritise particular methods for achieving its objective, such as increasing profile, sales, profits or reputation, but, always, the corporation seeks to maximize risk-adjusted returns to investors as its objective (Salvary, 1979). It must do this or it would be uncompetitive in the market for investment funds.…”

Section: Methodology: Objective Sense Of the Proposed Theorymentioning

confidence: 99%

“…Licensing fee: This includes paying taxes and obeying laws. Taxes are justified on the grounds that the company is a direct and indirect beneficiary of numerous public goods, such as law enforcement and education (Salvary, 1979).…”

Section: Methodology: Objective Sense Of the Proposed Theorymentioning

confidence: 99%

“…Financial reporting in the UK, as the progenitor of the corporation in its approximately modern form and as antecedent of the progressive development of financial reporting for the corporate entity, was substantially unregulated in the nineteenth century . Subsequent 'watershed' developments in accounting theory and regulation have been, and continue to be, responsive to the prevailing socioeconomic environment (Salvary, 1979), as will be detailed below.…”

Section: Historical Backgroundmentioning

confidence: 99%

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The Foundations for a General Theory of General Purpose Financial Reporting for Business

Sutton¹

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<p>Accounting standards setters have progressively moved towards decision-useful, investor-focused fair value accounting standards for general purpose financial reporting (GPFR). With some qualification, the case is made that this development is positive for accounting as a discipline. This paper develops a referent theory of accounting to contextualize standards setters' implicit direction, derived from existing research and literature. A central element in the development of this theory is the case made for 'investor-as-GPFR user'. Against this, stakeholder theory and positive accounting theory will be identified as confounding influences on the development of a general theory of accounting. The argument is for the investor, both current and potential, as the sole legitimate user of GPFR. The practical implications of the theory are considered against the prevailing debate over optimal accounting valuation method; the debate between fair value measurement and historical cost. The case is made that a number of ostensible dichotomies in accounting thought, such as between relevance and accountability, are substantially reconcilable. The mutual exclusivity often implied of accounting information relevance and accountability-cum-reliability is rejected. The development of a general theory of accounting is timely as such a referent theory is necessary to legitimize standards setting and secure accounting's place in an increasingly diverse financial information market. Inferentially, trends in the evolution of fair value standards reflect the dominant concern to meet threats to the discipline as a whole; this standard setting trend qualified in speed and degree by the narrow interests of 'constituents'.</p>

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Twentieth Century Academic Accounting’s Role in the Failure to Develop a Coherent Theory of Accounting

2010

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Tracing the Development of a Conceptual Framework of Accounting a Western European and North American Linkage: A Partial Examination

Cited by 4 publications

References 11 publications

The Purpose of Financial Reporting: The Case for Coherence in the Conceptual Framework and Standards

The Purpose of Financial Reporting: The Case for Coherence in the Conceptual Framework and Standards

The Foundations for a General Theory of General Purpose Financial Reporting for Business

Twentieth Century Academic Accounting’s Role in the Failure to Develop a Coherent Theory of Accounting

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