An Evaluation of the FASB’s Conceptual Framework from a User’s Perspective
Date of this version
conceptual framework, standard setting, decision making
The accounting conceptual framework has been criticized for not providing an adequate basis for standard setting. This inadequacy is evidenced by the Financial Accounting Standards Board’s (FASB) standards becoming more and more rules-based. Nevertheless, no empirical evidence has been gathered to support the criticisms of the conceptual framework. We analyze the five qualitative characteristics of accounting information in conjunction with an individual’s intention to use/rely on financial statements. Using structural equation modeling, we find that only one qualitative characteristic, reliability, affects a person’s intention to use/rely on financial statements for decision making. Additionally, we find that familiarity with accounting heavily influences an individual’s intention to use/rely on financial statements. Based on our findings, it seems that not only does the conceptual framework need to be altered, but it needs to be changed to help create principles-based accounting standards that are useful to a broader group of users regardless of their background.
Academy of Accounting and Financial Studies Journal