'Trading Places': A UK (and IFRS) Comment

Abstract

The other papers in this set focus on the US and the respective roles of the FASB and of accounting academics, considering how far they 'traded places' around the 1970s such that the standard setters (previously 'positive', i.e. starting from current 'generally accepted' practices) became 'normative' (i.e. starting from some theory or Conceptual Framework ('CF') of what would be 'the best' financial accounting and reporting) while the academics (previously normative) became positive — and thereby retreated from their earlier focus on advising standard setters how best to 'narrow the areas of difference in accounting practice' (Zeff, 2013b, p.3). As individual researchers, academics have aspired to become 'social scientists' rather than 'social engineers' (Glover, 2013, p.4) although the AAA’s Financial Accounting Standards Committee has continued to offer collective opinions on the merits of proposed FASB standards (Zeff, 2013b, p.2). Rather than give my own version of what happened and what the consequences have been in the US, I aim here to add a contrasting perspective from other countries (primarily the UK and the rest of Europe) that incorporates a variety of other actors and differing uses (or 'objectives') of financial accounting and reporting. I consider briefly in turn: the major actors; major external uses of financial reports; the 'rational institutional myths' that sustain the role of accounting standards; and the potential contributions both of research and of university accounting education.