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Should Financial Statements Represent Fairly or be Relevant?

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  • Alain Burlaud

    (LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM] - HESAM - HESAM Université - Communauté d'universités et d'établissements Hautes écoles Sorbonne Arts et métiers université)

Abstract

To ask if financial statements should "represent fairly" or be "relevant" gives a political dimension to the trade-off between reliability and relevance, two characteristics of financial reporting that the IASC/IASB Conceptual Framework does not consider to be conflicting. However, depending on the priority we give to these characteristics, the accounting system differs widely. Some concepts from the behavioural sciences help to better understand the underlying implicit and explicit hypotheses of IFRS's Conceptual Framework and to have a more critical perspective. The answer to the question of the choice between "fair representation" and "relevance" cannot be purely technical due to the fact that the information produced shapes the reality as well as describing it. Therefore, the standards setter has a political responsibility.

Suggested Citation

  • Alain Burlaud, 2013. "Should Financial Statements Represent Fairly or be Relevant?," Working Papers halshs-00873959, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00873959
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00873959
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    References listed on IDEAS

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    1. Alain Burlaud & Bernard Colasse, 2010. "Normalisation comptable internationale : le retour du politique ?," Post-Print halshs-02145364, HAL.
    2. Alain Burlaud & Bernard Colasse, 2011. "International Accounting Standardisation: Is Politics Back?," Accounting in Europe, Taylor & Francis Journals, vol. 8(1), pages 23-47, June.
    3. Alain Burlaud & Bernard Colasse, 2010. "Normalisation comptable internationale : le retour du politique ?," ACCRA, Association francophone de comptabilité, vol. 16(3), pages 153-175.
    4. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    5. repec:dau:papers:123456789/7512 is not listed on IDEAS
    6. Alain Burlaud & Bernard Colasse, 2011. "International Accounting Standardisation : Is Politics Back ?," Post-Print halshs-00665494, HAL.
    7. Alain Burlaud & Bernard Colasse, 2011. "International Accounting Standardisation: Is Politics Back?," Post-Print halshs-02145367, HAL.
    8. Bryer, Rob, 2012. "Americanism and financial accounting theory – Part 1: Was America born capitalist?," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 23(7), pages 511-555.
    9. Alain Burlaud & Bernard Colasse, 2010. "Normalisation comptable internationale : le retour du politique ?," Post-Print hal-00481562, HAL.
    10. repec:dau:papers:123456789/8901 is not listed on IDEAS
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    Cited by:

    1. Andreea Mihaela MARIN, 2017. "The Perception of the Romanian Economic Environment Regarding the Adoption of the International Financial Reporting Standards," North Economic Review, Technical University of Cluj Napoca, Department of Economics and Physics, vol. 1(1), pages 174-178, October.
    2. Alain Burlaud, 2020. "Evolutions of Accounting Standardization: The Shock of Financialization and Globalization," Post-Print halshs-03161123, HAL.

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