Accounting Horizons

American Accounting Association
DOI: 10.2308/acch.2010.24.2.279

Accounting Horizons
Vol. 24, No. 2
2010
pp. 279–296

COMMENTARY

The American Accounting Association’s
Financial Reporting Policy Committee’s
Response to the Preliminary Views on Financial
Statement Presentation
The Financial Reporting Policy Committee of the Financial Accounting and
Reporting Section of the American Accounting Association
Mark Bradshaw, Carolyn Callahan, Jack Ciesielski, Elizabeth Gordon,
Mark Kohlbeck, Leslie Hodder, Patrick E. Hopkins, Robert Laux,
Sarah McVay, Thomas Stober, Phillip Stocken, and Teri Lombardi Yohn
SYNOPSIS: The Financial Accounting Standards Board and the International Accounting Standards Board ͑hereafter, the Boards͒ issued the discussion paper Preliminary
Views on Financial Statement Presentation in late 2008. The Boards propose to significantly reconfigure the presentation of financial statements to offer parallel statements with standardized partitions of each financial statement into five categories: business activities, financing activities, income taxes, discontinued operations, and equity. The allocation of transactions within these partitions will depend crucially on management’s assessment of each transaction ͑i.e., the management approach͒. In this paper we comment on the proposal, with particular emphasis on empirical evidence and relevant theories from academic research. We highlight benefits of the proposed changes as well as some possible concerns. We conclude that the objective of providing a cohesive picture of activities through a uniform standardization of each financial statement by activity is desirable, but the proposed criteria for how activities are categorized results in potentially aberrant or confusing outcomes. Thus, any dissatisfaction with the current financial statement format may be replaced with other criticisms. Finally, the current proposal relies on the effectiveness of the management approach, which can

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