Two conflicting definitions of relevance in the FASB Conceptual Framework
Oliver Kim and
Steve C. Lim
Journal of Accounting and Public Policy, 2010, vol. 29, issue 6, 604-611
In this paper we show that the FASB Conceptual Framework stipulates two mutually conflicting definitions of relevance. Both the original FASB Concepts Statement No. 2 of May 1980 and the IASB/FASB Exposure Draft of May 2008 define relevance as the pertinence of the selected economic phenomenon to the decisions of accounting users. However, both pronouncements also define relevance as the pertinence of accounting information to decisions. While many textbooks and conceptual frameworks of other countries use the second definition, we provide evidence that the first definition is more consistent with a model in which relevance and faithful representation are the two essential qualities required for the provision of useful accounting information. To improve internal consistency, the second definition should be removed from the Concepts Statement.
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jappol:v:29:y::i:6:p:604-611
Access Statistics for this article
Journal of Accounting and Public Policy is currently edited by L. A. Gordon
More articles in Journal of Accounting and Public Policy from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().