The objectives of financial reporting: a historical survey and analysis

This article is a survey and analysis of the succession of writings on the objectives of financial reporting during the past 90 years. Its aim is to contribute towards an understanding of the origins, significance, and limitations of conceptual frameworks. The article begins with a review of the extensive literature, including the series of recommended and approved conceptual frameworks, in the USA and then proceeds to examine the corresponding literatures in Great Britain, Canada, and Australia, followed by a discussion of the framework issued by the International Accounting Standards Committee in 1989 and Chapters 1 and 3 of the framework issued by the International Accounting Standards Board and Financial Accounting Standards Board in 2010. Summary remarks about Continental Europe conclude the survey. Attention is drawn to the criticisms of the objectives approach as well as to its possible perverse consequences for the remainder of the framework. In the course of the survey, there is an attempt to trace the evolution of stewardship and conservatism, or prudence, in the series of frameworks.