MacveComment_on_FASB_IASB_July05

MacveComment_on_FASB_IASB_July05 - rmv/ergo/asb/ wordcount...

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wordcount: 2739 pages:6 24 July 2005 24 th July 2005 FASB/IASB Revisiting the Concepts : a comment on Hicks and the concept of ‘income’ in the conceptual framework Professor Michael Bromwich, London School of Economics [email protected] Professor Richard Macve, London School of Economics [email protected] Professor Shyam Sunder, Yale School of Management [email protected] Preliminary note : The status of this FASB/IASB ‘communications’ paper (dated May 2005) on ‘a new conceptual framework project’ 1 is not entirely clear. It is written by FASB and IASB staff members (Halsey G. Bullen and Kimberley Crook) but does not carry any of the customary disclaimers as to the status of staff opinions relative to the Boards’ need for extensive due processes etc., and it is billed without explanation on the Boards’ websites. We therefore have to presume it is to be taken as an authoritative joint statement of how the two Boards currently intend to undertake the convergence of their existing conceptual frameworks, even though there has not apparently been any prior exposure for public comment. Nor is any comment now invited. However, given the highly contestable nature of many of the arguments the paper contains, it would seem appropriate that the Boards do invite public comment before any decisions are taken to expend further resources on pursuing the line of approach for converging and revising their conceptual frameworks that is set forth in the paper. We ourselves may prepare a fuller comment in due course. However, here we focus principally on what appears to be—and is predicted in the paper to continue to be—the bedrock of the Boards’ frameworks, namely the conceptual ‘primacy of assets’ (p.9) and especially its purported derivation from Professor Sir John Hicks’s (1946) definition of ‘income’ (p.7; p.18). Since other national standard setters, such as the UK’s ASB, also have similar frameworks (referred to at p.3 of the paper), we are copying this comment to the ASB as well (as Richard Macve is also a member of the ASB’s Academic Panel and Michael Bromwich is a former member of the ASC). Further discussion of the ASB’s own Statement of Principles , which is also relevant to the arguments we make here and cites further relevant literature, may be found in Bromwich (2001). We trust this comment will be made public in the normal way for comment letters sent to the respective Boards, and we shall be glad to see the Boards’ response (whether joint or several) to this and others’ comments in due course. We would of course be happy to amplify any of the points made here and to provide appropriate references to further reading if that would be helpful to Board members and staff. 1
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This note was uploaded on 10/07/2010 for the course ECTCS ec12947322 taught by Professor Johnathayeri during the Spring '10 term at Life.

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MacveComment_on_FASB_IASB_July05 - rmv/ergo/asb/ wordcount...

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