FASB’s Statements on Objectives and Elements of Financial Accounting: A Review

This paper provides a critical review of the FASB’s Statement on Objectives and of its Exposure Draft on the elements of financial accounting. First, the FASB’s statements are compared with those of the previous authoritative bodies. Little that is new and little that can be expected to aid in the resolution of accounting issues can be found in the FASB’s Statements. If the previous authoritative statements on objectives (and conceptual framework) can be adjudged failures, there is reason to believe that the present effort will have a similar future. Second, the reasons for such failure are considered and it is found that objectives of financial accounting do not have an unambiguous interpretation. Several explanations as to why accountants continue to seek an authoritative definition of objectives (and conceptual framework) can be adjudged failures, there is reason to believe that the present effort will have a similar future. Second, the reasons for such failure are considered and it is found that objectives of financial accounting do not have an unambiguous interpretation. Several explanations as to why accountants continue to seek an authoritative definition of objectives (and conceptual framework) are offered and some modest proposals for the “objectives of the FASB” are discussed at the end of the paper.