1000 WORD ESSAY

© 1998 American Accounting Association Accounting Horizons Vol. 12 No. 2 June 1998 pp. 160

Six Commentaries on Characteristics of Higii Quaiity

Accounting Standards Eugene A. Imhoff, Jr.

Eugene A. Imhoff, Jr. is a Professor at the University of Michigan and Editor o/" Accounting Horizons.

In the March 1998 issue of Accounting Horizons, we published a commentary by Arthvu- Levitt, Chairman ofthe U.S. Securities and Exchange Commission, regarding the importance of high quality accounting standards. In this issue, we provide six com- mentaries that address the question: What are the attributes of high quality accounting standards? The responses provided in this issue were originally part ofthe December 1997 AAA/FASB Financial Reporting Issues Conference. One of the objectives of the conference was to determine whether a consensus could be reached on the attributes of a quality accounting standard.

Certain "attributes" or "concepts" have long guided standard setting in the U.S. Today, their "Conceptual Framework" as contained in Statements of Financial Account- ing Concepts guides the FASB's standard-setting process. A good portion of these Con- cepts statements followed logically from predecessor documents, such as A Statenient of Basic Accounting Theory published by the AAA (1966) and the Accounting Principles Board's Statement No. 4, Basic Concepts and Accounting Principles Underlying Finan- cial Statements of Business Enterprises (PdCTA1970). The FASB's Concepts Statement No. 2, Qualitative Characteristics of Accounting Information (FASB 1980), is probably the most direct link to prior theoretical documents, providing normative propositions as to the characteristics that should be reflected in accounting information. It is inter- esting to read the commentaries that follow in the context of these prior documents, all of which have implicitly sought answers to the same question addressed here: What are the characteristics of high quality accounting standards? The following commentaries provide readers of Accounting Horizons with the current thinking of some accountants and users of financial statements on this important question.