Wanted: Foundations of Accounting Measurement

Abstract

From time to time for over 150 years pervasive flaws in accounting thought and practice have been brought to notice.The principal focus of attention has been the almost limitless array of valuation (or quantification) rules that have emerged under the widely fostered view that each mercantile firm may choose (and vary, as it pleases) the combination of rules that its accounts will follow.For the past seventy years professional and regulatory bodies have affirmed the desirability of 'reducing the variety' of those rules.But time after time the task has been shirked-to the point where one of the latest major exercises simply averred that five different valuation bases (called 'attributes') are used in present practice, and their use was expected to continue (FASB, 1994/5, p. 151).But to return to the immediate antecedents of 'Wanted: Foundations of Accounting Measurement'.In 1966 was published A Statement of Basic Accounting Theory (ASOBAT), prepared by the Committee on Foundations of Accounting Measurement of the American Accounting Association (AAA, 1966).This, surely, was a proper place to deal with the logical conditions of aggregation and relation -and measurement generally.But, like most other products of committees and boards in the U.S. and elsewhere, ASOBAT had little to say about accounting as measurement.Perhaps the 'Foundations' committee was set up to make good that oversight; for, if accounting could be shown, by argument and illustration, to be an exercise in measurement, nonsensical, superfluous, mutually contradictory rules could be eliminated.The Report of the Committee (AAA, 1971), however, promised none of these things.The critique here reproduced verbatim was

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