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The Decline of Substance over Form in Accounting

Author

Listed:
  • Fischer Dov
  • Schochet Sholom

    (Brooklyn College, Brooklyn, NY, USA)

  • Ellman Ortal

    (EY, New York, NY, USA)

Abstract

“Substance over form” is a traditional accounting maxim that has also influenced legal thinking and has its roots in classical philosophy. “Substance over form” states that accountants do not record transactions based on the outward form of the transaction but discern its economic substance and report accordingly. Nevertheless, “substance over form” has been deemphasized by the FASB’s conceptual framework in recent decades, to the point that an internal debate now rages over whether accountants and auditors have a right and responsibility to put substance over form. FASB must therefore make its position clear on where it stands in this debate.

Suggested Citation

  • Fischer Dov & Schochet Sholom & Ellman Ortal, 2023. "The Decline of Substance over Form in Accounting," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 13(3), pages 373-390, August.
    • Handle: RePEc:bpj:aelcon:v:13:y:2023:i:3:p:373-390:n:3
    DOI: 10.1515/ael-2019-0052
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    More about this item

    Keywords

    substance over form; faithful representation; conceptual framework;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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