The Objectives Of Financial Reporting

2262 Words Sep 2nd, 2014 10 Pages
The objectives of financial reporting are a key element of financial accounting standard setting. Standard setters have identified financial accounting as providing valuation-relevant information and contracting-relevant information (Zeff, 2012). The Financial Accounting Standards Board (FASB) states that the general objective of financial reporting is to provide ‘information that is useful to represent any potential investors and creditors and other users in making rational investment, credit and similar decisions’ (FASB, 2008). It is then narrowed down into two sub-objectives; ‘information to help users in assessing the amounts, timing and uncertainty of prospective cash receipts’ (decision-usefulness) and ‘information about how management of an enterprise has discharged its stewardship responsibility to stockholders for the use of enterprise resources entrusted to it’ (stewardship) (FASB, 2008). The purpose of this report is to determine the difference between stewardship and decision-usefulness in relation to the impact on financial reporting and the conceptual framework. To come to any conclusions on the matter I will analysis articles and arguments proving or disapproving the re-instatement of stewardship as a separate objective of financial reporting.

2.0 Stewardship vs Decision-usefulness
2.1 Stewardship
In financial reporting, stewardship contributes an important dimension, which should be reflected by specific acknowledgement in the objectives…
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