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The International Accounting Standards Board’s Progress in Promoting Judgement Through Objectives-Oriented Accounting Standards

Author

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  • Tanja Lakovic

    (Teaching Assistant, Faculty of Economics, University of Montenegro)

  • Jayne Fuglister

    (Fulbright Professor, September – December, 2012, Faculty of Economics, University of Montenegro)

Abstract

This study analyzes how the International Accounting Standards Board (IASB) promotes professional judgement by issuing objectives-oriented accounting standards and exposure drafts. We focus on the the role of judgement as outlined in Phase I of the IASB Conceptual Framework (CF), Chapter 1, “Objective of General Purpose Financial Statements†and Chapter 3, “Qualitative Characteristics of Useful Financial Information†(IASB 2010). We discuss how the framework, when viewed through the prism of 'objectives-oriented accounting standards' as recommended by the United States Securities and Exchange Commission (SEC) Report in its “Study Pursuant to Section 108(d) of the Sarbanes-Oxley Act of 2002 on the Adoption by the United States Financial Reporting System of a Principles-Based Accounting System†(July 2003), encourages professional judgement. We analyze International Financial Reporting Standards (IFRS) and Exposure Drafts (ED) issued by the IASB since its inception in 2002 to determine if those documents are consistent with objectives-oriented accounting standards. Our analysis is useful for gaining insights into how the IASB integrates the CF with the SEC’s recommended objectives-oriented accounting approach to promote judgement in the interest of IASB/FASB convergence of accounting standards.

Suggested Citation

  • Tanja Lakovic & Jayne Fuglister, 2013. "The International Accounting Standards Board’s Progress in Promoting Judgement Through Objectives-Oriented Accounting Standards," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 3(7), pages 28-42, July.
    • Handle: RePEc:mir:mirbus:v:3:y:2013:i:7:p:28-42
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    References listed on IDEAS

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    1. Bruce Bennett & Michael Bradbury & Helen Prangnell, 2006. "Rules, principles and judgments in accounting standards," Abacus, Accounting Foundation, University of Sydney, vol. 42(2), pages 189-204, June.
    2. Roger W. Ferguson, 2006. "Remarks to the Financial Stability Forum, International Accounting Standards Board, and International Federation of Accountants Roundtable on Financial Reporting and Auditing, Paris, France (via video," Speech 173, Board of Governors of the Federal Reserve System (U.S.).
    3. George J. Benston & Michael Bromwich & Alfred Wagenhofer, 2006. "Principles‐ versus rules‐based accounting standards: the FASB's standard setting strategy," Abacus, Accounting Foundation, University of Sydney, vol. 42(2), pages 165-188, June.
    4. Jim Psaros & Ken T. Trotman, 2004. "The Impact of the Type of Accounting Standards on Preparers’ Judgments," Abacus, Accounting Foundation, University of Sydney, vol. 40(1), pages 76-93, February.
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    Cited by:

    1. Alain Burlaud & Maria Niculescu, 2016. "Accounting standards that appeal to the professional judgment: a threat or an opportunity for the accounting profession [Un drept contabil care face appel la raţionamentul profesional: o ameninţare," Post-Print halshs-02145487, HAL.
    2. Alain BURLAUD & Maria NICULESCU, 2016. "Accounting standards that appeal to the professional," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 14(144), pages 1325-1325.

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