Should Financial Statements Represent Fairly or be Relevant?

Alain Burlaud ()
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Alain Burlaud: LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - Cnam - Conservatoire National des Arts et Métiers [Cnam]

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Abstract: To ask if financial statements should "represent fairly" or be "relevant" gives a political dimension to the trade-off between reliability and relevance, two characteristics of financial reporting that the IASC/IASB Conceptual Framework does not consider to be conflicting. However, depending on the priority we give to these characteristics, the accounting system differs widely. Some concepts from the behavioural sciences help to better understand the underlying implicit and explicit hypotheses of IFRS's Conceptual Framework and to have a more critical perspective. The answer to the question of the choice between "fair representation" and "relevance" cannot be purely technical due to the fact that the information produced shapes the reality as well as describing it. Therefore, the standards setter has a political responsibility.

Keywords: IFRS; true and fair view; fair representation; reliability; relevance; conceptual framework; image fidèle; fidélité; pertinence; cadre conceptuel (search for similar items in EconPapers)
Date: 2013-10-11
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00873959v1
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