Decision-Usefulness and Stewardship As Conceptual Framework Objectives: Continuing Challenges

Abstract

While, since 2006, the International Accounting Standards Board (IASB) has held decision-usefulness to be the primary objective of financial reporting, constituents have consistently called for stewardship/accountability to be a second objective. Such strong lobbying has led the IASB to amend the objectives of financial reporting by increasing the prominence of stewardship, favoured by many European constituents. However, these two objectives have different theoretical bases and the potential users have different needs. Two different objectives should result, at times, in different presentation and measurement. The purpose of this paper is to project the implications if the IASB prioritizes dual objectives (decision-usefulness and stewardship) for general purpose financial reporting of both monetary and non-monetary information. We analyse specific potential conflicts in extant financial reporting standards. A potential solution to the IASB’s dilemma is to balance constituents’ demands by explicitly acknowledging which users’ needs are being pursued and why.

Keywords: Accountability, Conceptual Framework, Decision-usefulness, Hybrid model, Stewardship, Users’ needs