Toward a Measurement Framework for Financial Reporting by Profit-oriented Entities
I have completed a paper Toward a Measurement Framework for Financial Reporting by Profit-oriented Entities (132 pages) that has been published by the Canadian Institute of Chartered Accountants (CICA) at the request of the Canadian Accounting Standards Board (AcSB).
The paper proposes a measurement framework that is reasoned from fundamental premises about economic business purposes, financial reporting objectives, and the role of markets and market prices. It sets out to demonstrate that substantial improvement in the conceptual underpinnings of financial reporting measurement is both possible and urgently needed. The paper’s proposals would have significant implications for financial reporting.
Copies of the paper can be downloaded free of charge from the CICA website: www.cica.ca/measurement. The CICA invites comments on the paper’s proposals with a suggested comment period ending on November 30 2012.
I have also set up a blog: http://measurementframework.blogspot.ca/ to encourage open discussion of the paper and financial reporting measurement issues generally. All who have an interest in the improvement of financial reporting measurement are encouraged to submit comments, questions, and ideas. In particular, the blog encourages academics to provide summaries of, and links to, relevant empirical and theoretical research articles and papers.
The paper and information about the blog are being given wide international distribution. The hope is that the paper and blog will serve as a stimulus for a long overdue rigorous re-examination of financial reporting measurement theory. I strongly believe that progress towards developing a coherent measurement foundation for financial reporting will be possible only through rigorous study and extensive sharing of evidence and arguments involving all stakeholders comprising the full range of viewpoints and relevant knowledge bases and areas of expertise.
An in depth analysis of comments received and the blog discussions will be provided to the IASB and FASB conceptual framework measurement projects, which we hope will be reactivated in the not-too-distant future.
Accounting academics are invited to visit the CICA website and my blog, study the paper, submit comments, and check out and participate in the blog discussions. I might add that there has been some interest in using the paper in advanced financial reporting courses.
J. Alex Milburn PhD, FCA