The Limitations of Accounting; A Response

The accounting profession is facing mounting pressures from external sources and also is witnessing a growing internal dichotomy between the preparers of financial data and the standards setters. This disparity stems from the lack of agreement on the purposes, uses, and limitations of accounting data. Early on, the Financial Accounting Standards Board gave preference to the asset-liability view that lent itself to the current value measurement approach, in spite of arguments by accountants in business for maintaining the historical cost-based accounting model and the matching concept. In response, it is argued that sufficient agreement has already been achieved. The causes of the existing tension are recent standards and projects in process. The standards setting process can best serve the public and the business community if it is free from undue influence by any organized group.