ED151, A Flawed Approach

Brian Andrew, Mark Hughes

    Research output: Contribution to journalArticle

    Abstract

    This paper argues the recent proposals expressed by the Australian Accounting Standard Board in Exposure Draft 151 contradicts the historical trend of standard setters attempting to achieve the objective of financial reporting, that is, the provision of decision-useful information for users of general purpose financial reports. Historically, standard setters have tried to achieve this objective by reducing alternative treatments in accounting standards and providing increasing levels of information for users. Exposure Draft 151 affects many standards, however, this paper focuses on the proposal to allow preparers the option of selecting between the direct or indirect method of presenting cash flows from operations in the statement of cash flows. We argue that this discretion contradicts the stated objective of financial reporting, as stated in the Conceptual Framework, as it will lead to the widespread adoption of the less informative indirect method, due to a structural bias in the requirements of AASB 107 and IASB 7, the relevant standards relating to the statement of cash flows
    Original languageEnglish
    Pages (from-to)12-21
    Number of pages10
    JournalAustralasian Accounting, Business and Finance Journal
    Volume1
    Issue number3
    Publication statusPublished - 2007

    Fingerprint

    Cash flow
    Financial reporting
    Accounting standards
    Draft
    Discretion
    International Accounting Standards Board
    Conceptual framework

    Cite this

    @article{81a3b6c465cc44e7b7f4c6d5597f2bb6,
    title = "ED151, A Flawed Approach",
    abstract = "This paper argues the recent proposals expressed by the Australian Accounting Standard Board in Exposure Draft 151 contradicts the historical trend of standard setters attempting to achieve the objective of financial reporting, that is, the provision of decision-useful information for users of general purpose financial reports. Historically, standard setters have tried to achieve this objective by reducing alternative treatments in accounting standards and providing increasing levels of information for users. Exposure Draft 151 affects many standards, however, this paper focuses on the proposal to allow preparers the option of selecting between the direct or indirect method of presenting cash flows from operations in the statement of cash flows. We argue that this discretion contradicts the stated objective of financial reporting, as stated in the Conceptual Framework, as it will lead to the widespread adoption of the less informative indirect method, due to a structural bias in the requirements of AASB 107 and IASB 7, the relevant standards relating to the statement of cash flows",
    author = "Brian Andrew and Mark Hughes",
    year = "2007",
    language = "English",
    volume = "1",
    pages = "12--21",
    journal = "Australasian Accounting, Business and Finance Journal",
    issn = "1834-2000",
    publisher = "University of Wollongong",
    number = "3",

    }

    ED151, A Flawed Approach. / Andrew, Brian; Hughes, Mark.

    In: Australasian Accounting, Business and Finance Journal, Vol. 1, No. 3, 2007, p. 12-21.

    Research output: Contribution to journalArticle

    TY - JOUR

    T1 - ED151, A Flawed Approach

    AU - Andrew, Brian

    AU - Hughes, Mark

    PY - 2007

    Y1 - 2007

    N2 - This paper argues the recent proposals expressed by the Australian Accounting Standard Board in Exposure Draft 151 contradicts the historical trend of standard setters attempting to achieve the objective of financial reporting, that is, the provision of decision-useful information for users of general purpose financial reports. Historically, standard setters have tried to achieve this objective by reducing alternative treatments in accounting standards and providing increasing levels of information for users. Exposure Draft 151 affects many standards, however, this paper focuses on the proposal to allow preparers the option of selecting between the direct or indirect method of presenting cash flows from operations in the statement of cash flows. We argue that this discretion contradicts the stated objective of financial reporting, as stated in the Conceptual Framework, as it will lead to the widespread adoption of the less informative indirect method, due to a structural bias in the requirements of AASB 107 and IASB 7, the relevant standards relating to the statement of cash flows

    AB - This paper argues the recent proposals expressed by the Australian Accounting Standard Board in Exposure Draft 151 contradicts the historical trend of standard setters attempting to achieve the objective of financial reporting, that is, the provision of decision-useful information for users of general purpose financial reports. Historically, standard setters have tried to achieve this objective by reducing alternative treatments in accounting standards and providing increasing levels of information for users. Exposure Draft 151 affects many standards, however, this paper focuses on the proposal to allow preparers the option of selecting between the direct or indirect method of presenting cash flows from operations in the statement of cash flows. We argue that this discretion contradicts the stated objective of financial reporting, as stated in the Conceptual Framework, as it will lead to the widespread adoption of the less informative indirect method, due to a structural bias in the requirements of AASB 107 and IASB 7, the relevant standards relating to the statement of cash flows

    M3 - Article

    VL - 1

    SP - 12

    EP - 21

    JO - Australasian Accounting, Business and Finance Journal

    JF - Australasian Accounting, Business and Finance Journal

    SN - 1834-2000

    IS - 3

    ER -