Universität zu Köln

Erb, Carsten and Pelger, Christoph (2015). Twisting words? A study of the construction and reconstruction of reliability in financial reporting standard-setting. Account. Organ. Soc., 40. S. 13 - 41. OXFORD: PERGAMON-ELSEVIER SCIENCE LTD. ISSN 1873-6289

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Abstract

Qualitative characteristics serve to operationalise the objective of financial reporting and aim at shaping accounting discourses of standard-setters and their constituents. In the recent revision of their conceptual frameworks, the IASB and FASB decided to replace reliability, arguably one of the most important properties of accounting, with representational faithfulness. The aim of the present paper is to shed light on the boards' decision through a historical analysis of how reliability appeared in standard-setting and by tracing its abandonment in detail. Our study reveals that the standard-setters' construction and reconstruction of reliability attempted to undermine traditional practitioner understandings along the lines of objectivity/verifiability in order to extend the boundaries of appropriate financial reporting in the direction of current/fair values. However, as the introduction of more abstract concepts raised difficulties in reconciling the new terminology with everyday accounting practice, this turn created confusion among constituents and board members. Our paper also contributes to further our understanding about decision-making processes in standard-setting. In particular, we show how a group of board and staff members was able to establish the replacement of reliability in spite of (and partly taking advantage of) constituents' concerns and widespread confusion about the terms. (C) 2014 Elsevier Ltd. All rights reserved.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Erb, Carsten UNSPECIFIED UNSPECIFIED UNSPECIFIED Pelger, Christoph UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-417349
DOI:	10.1016/j.aos.2014.11.001
Journal or Publication Title:	Account. Organ. Soc.
Volume:	40
Page Range:	S. 13 - 41
Date:	2015
Publisher:	PERGAMON-ELSEVIER SCIENCE LTD
Place of Publication:	OXFORD
ISSN:	1873-6289
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language IASB/FASB CONCEPTUAL-FRAMEWORK; FAIR VALUE; FORMAL PARTICIPATION; ACCOUNTING RESEARCH; OBJECTIVITY; STATEMENT; ISSUES; STEWARDSHIP; RELEVANCE; TRUTH Multiple languages Business, Finance Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/41734