On the methodology of a conceptual framework for financial accounting Part 1: An historical and jurisprudential analysis

Abstract

This is the first of a pair of papers which examine some important questions raised by the ‘conceptual framework’ (CF) project carried out by the FASB in the late 1970s and early 1980s. This project has not generally been considered a success, in spite of the magnitude of the resources at the FASB's disposal. The present paper provides a critique of the approach used by the FASB, by analysing the Board's methodology as it appears from key documents published by the Board in the course of the project, against a background of methodological insights available from studies of policy formulation (Lindblom, 1959) and of legal validity (Raz, 1979) - insights of which the FASB was apparently quite unaware. This analysis shows why the CF, insofar as it was intended to achieve its ostensible aim of conferring powers of standard setting on the FASB independent of those delegated to it by the SEC, was unsuccessful. The second paper extends the analysis based on jurisprudence into the field of ‘soft systems’ analysis, against a historical background of developments in systems methodology during the 1970s - developments of which the FASB was again apparently quite unaware. It concludes with some implications for accounting as an applied social and behavioural science.

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