Last December, I announced that I have started to write a book that would propose a very different basis for financial accounting by public companies. I’m calling it ‘Shareholder-Oriented Financial Accounting’ (S-OFA), and this is the opening paragraph I have in mind:
Public company financial statements are sacks of mush. U.S. GAAP and IFRS are based on a common and logically-flawed conceptual framework. Their rules are different in some respects, but they share the characteristics of being arbitrary, internally inconsistent and needlessly complex. They are also rife with ostentatious terminology and labelling that misrepresents their relevance to investors and economic policy makers.
The purpose of this book is twofold: (1) to support the above condemnation with detailed analyses; (2) and more important, to specify a detailed foundation for producing financial statements that is much less costly, much less complicated, more relevant, more understandable and more reliable.
With respect to the first [Read More...]