Comment letters to the National Commission on Commission on Fraudulent Financial Reporting, 1987 (Treadway Commission) Vol. 2

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An Evolving Conceptual Framework?

The history of the conceptual framework (CF) exercise indicates more a search for a rationale for current practice than a re-affirmation of the legal, social and economic (especially financial) framework within which accounting is to function, and the necessary shape of a compatible system of accounting. Interestingly, issues similar to those presaging the formation of the American Institute of Certified Public Accountants’ Wheat and Trueblood Committees (antecedents of the formation of the Financial Accounting Standards Board in 1973 and its CF project in 1976) are evident again today. Such events led to a reconsideration of the effectiveness of CFs in their current form as ‘constitutions’. Arguably, the framework of concepts underpinning ordinary, everyday commerce is the CF of accounting. The quest for a unique constitution-based CF of accounting, independent of observables, has been misplaced, insofar it is unnecessary. Arguably, if more attention had been given to the function of accounting the futility of the CF exercise could have been avoided