Setting Financial Accounting Standards for the Twenty-first Century

This paper was prepared for the purpose of facilitating discussion at the Symposium on Financial Reporting and Standard Setting sponsored by the American Institute of Certified Public Accountants. The authors of the paper believe that the changing environment necessitates a thorough reexamination of financial accounting standard-setting processes in the United States. The following observations underlie the propositions offered in the paper: * The increasing demand for and availability of alternative information is decreasing the demand for traditional financial accounting information. * The conventional historical-cost-based accounting model is becoming increasingly inadequate for decision-support purposes