Qualitative characteristics of financial reporting: a historical perspective
Abstract
Purpose
This paper aims to provide a historical review for several leading documents in relation to the objectives of financial statements. These documents are: The Trueblood Report, The Corporate Report, Making Corporate Reports Valuable; and Guidelines for Financial Reporting Standards. These documents have a significant importance in financial reporting literature.
Design/methodology/approach
Content analysis approach was adopted in this study given its analytical and comparative nature of historical documents. In terms of studying historical data, content analysis main advantage is objectivity, in addition to its ability to provide unobtrusive evidence of historical trends.
Findings
The historical review showed that the basic objective of financial statements is concerned with providing useful information for economic decision making. In addition, it emphasized that information is useful when: it shows economic reality of the financial statements (i.e. balance sheet, income statement and cash flow statement); and it is relevant and reliable to users.
Practical implications
In view of the comparison and analysis above, the four documents emphasized on the usefulness of accounting for decision‐making purposes and as such it leads to an inference that accounts should essentially portray economic reality.
Originality/value
In light of current financial reporting failure, it is important to revise leading documents in relation to the objectives of financial statements and to evaluate current developments. This paper is of much value to the accounting profession, as well as to the corporate reporting setters.
Keywords
Citation
Shahwan, Y. (2008), "Qualitative characteristics of financial reporting: a historical perspective", Journal of Applied Accounting Research, Vol. 9 No. 3, pp. 192-202. https://doi.org/10.1108/09675420810919748
Publisher
:Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited