American Accounting Association's Financial Accounting Standards Committee: Criteria for Assessing the Quality of an Accounting Standard

A high quality accounting standard improves financial reporting by enhancing financial statement users' abilities to make investment and credit decisions. In implementing this criterion to evaluate proposed accounting standards, the following issues are considered: 1. Does the proposed accounting standard address a deficiency in the financial reporting model? 2. Does the proposed accounting standard correct the perceived deficiency in financial reporting by improving financial statement users' abilities to make investments and credit decision? 3. Do expected benefits from issuing the proposed standard exceed expected costs?