Conceptual framework slides (2)

The aim of this paper is to analyze the question of whether the sole focus of standard setters developing accounting standards that are useful to external users for making decisions about providing resources to the entity result in useful accounting information. To answer this question, we analyzed the relationship between the stewardship function of financial accounting and the demand for information useful in making economic decisions on resource allocation (decision-making demand; decision-useful information) by external investors. We first analyse information within an efficiencybased framework of financial economics abstracting from agency conflicts. We demonstrate that decisions on resource allocation not only require forward-looking, but also backward-looking performance measures which indicate the necessity as well as the direction of corrective action. Next, we introduce information asymmetries and incentive problems. In this setting, the stewardship function of accounting gains relevance. External users now need not only information for their investment decisions but also information to use in assessing management performance and to gain insight into how management used the entity's resources. Since however, managers anticipate the way they are evaluated, any accounting information used to control management has an incentive effect and alters management's internal decision-making. Therefore, standard setters cannot ignore the incentive effect (stewardship function) of financial accounting information and the consequence it has for decision-1 Correspondence address: University of Augsburg, tel. Accounting and Management Information Systems Vol. 12, No. 2 156 making. If standard setters consider decision-usefulness and stewardship as compatible functions of accounting, accounting rules need to serve both functions simultaneously, that is, provide information that is useful for investors for making economic decisions and at the same time provide incentives for managers to act in the owners' best interests. Or, if in fact the two functions are considered distinct and incompatible, then they must be separated and considered explicitly. That is, managers should then not be held accountable for their actions based on accounting information. Decision-Usefulness, Qualitative Characteristics, Stewardship, Standard Setting JEL codes: G14, M41, M44, M45, D82  The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 157 Accounting and Management Information Systems Vol. 12, No. 2 158 The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 159 Accounting and Management Information Systems Vol. 12, No. 2 160 The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 161 The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 163 Accounting and Management Information Systems Vol. 12, No. 2 164 The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 165 The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 167 The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 173 Accounting and Management Information Systems Vol. 12, No. 2 174 The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 179 The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 183 Accounting and Management Information Systems Vol. 12, No. 2 184 The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 187 The role of management as a user of accounting information: implications for standard setting Vol. 12, No. 2 189

asbbs.org

, Fair Value Measurements in 2006, there was controversy over the use and application of fair value accounting (FVA). This paper compares FVA to the conceptual framework of accounting embodied in FASB's Statements of Financial Accounting Concepts (SFAC's). FVA is found to deviate significantly from this set of guiding accounting principles in several respects. FVA sacrifices reliability for a questionable degree of relevance; it fails to faithfully represent what it purports to represent; it focuses on investors to the detriment of other user groups; and it changes the focus of financial reporting from earnings to asset valuation, from business transactions to market events, and from management performance to entity liquidation value. In addition, variations in the application of FVA among firms reduce comparability, consistency, and (although not in the conceptual framework) transparency-an oft-cited benefit of FVA. Pushing forward with FVA even beyond their international peers, US standard-setters seem more concerned with foreign approval than with the needs of their domestic constituents. FVA needs to be reevaluated, and FASB should adopt a mixed model approach that faithfully represents the values of assets and liabilities as they are intended to be used by management. Ultimately, the "new" FVA standards that emerge from this process should be thoroughly grounded upon and in agreement with the conceptual framework of accounting to serve the needs of all stated users of financial reporting.

KNOWLEDGE International Journal, 2019

The subject of research in this work is the accounting of enterprises on a global scale. The subject of the article is to develop a global accounting framework for preparing and presenting the financial statements of business enterprises. The primary objective of the study is by analyzing the applicable accounting frameworks of IFRS, US and EU to derive the concept of financial reporting fundamentals. In the article is supported the thesis that the integration of different national accounting legislation and internationally applicable accounting frameworks is a theoretical and practical possible and feasible process at the center of which lies the deductive conceptual approach. The ultimate outcome of accounting integration will be reflected in the global adoption of the concept that financial reporting is a whole, comprehensive and complete process that aims to provide high quality information about the entity's business, the results achieved and the effectiveness of its operations, the changes in its cash flows and equity. The research approach is aimed at carrying out a structural analysis of the fundamental rules, norms and requirements of the conceptual frameworks of IFRS and the US Generally Accepted Accounting Principles as well as the EU Accounting Regulations. On this basis, on the one hand, the basic similarities and resemblances of the accounting frameworks in question are systematized and, on the other hand, their most significant contradictions are summarized. An attempt has been made to outline the factors, conditions and circumstances that have led to the establishment and adoption of different concepts in the accounting and presentation of financial statements of business enterprises. The article presents the role and importance of the processes of harmonization, convergence and adaptation of accounting rules as part of the evolutionary development of financial reporting. The author draws special attention to the fact that the integration of financial reporting should not be absolutized. Accounting globalization implies that, at global level, basic concepts, principles, rules and bases of accounting and presentation of aggregated accounting information are adopted in the financial statements of enterprises but at the same time hierarchically subject to specific rules and norms corresponding to the local , national and regional specificities. Although a global consensus has been reached on the purpose of financial reporting, at an individual enterprise level, accounting needs to meet the objectives, requirements and needs of both the owners of the capital and the external users of the summarized accounting information. In this regard, the European Union's experience with the enterprise categorization approach and, for each category, the applicable accounting basis and the minimum requirements for the content and structure of the financial statements can be successfully used internationally.

AND ACCOUNTING, 2011

Topic 606 fundamentally supports SFAC No. 5 and 6 by forcing the recognition of revenue into the terms and obligations of a contract. It was also identified how Topic 606 generally improves on the objectives of SFAC No. 8 through relevance, materiality, and faithful presentation of financial reporting; which was a key objective of the principles-based standard. While considering these concepts, a theme was addressed throughout the paper that the due process played significant role in determining how the FASB structured their Accounting Standard Update. As a result, the FASB was pushed to allow for greater transaction-specific guidance within the principles-based framework; such as the example of licensing intellectual property. This is concerning under Miller’s current financial reporting paradigm, which emphasizes management’s incentive to manipulate earnings.