Response to FASB Exposure Draft, "Proposed Statement of Financial Accounting Concepts--Using Cash Flow Information in Accounting Measurements"

The Financial Accounting Standards Committee of the American Accounting Association is charged with responding to documents issued by standard setters relating to financial reporting. The committee has met and discussed the FASB (1997) Exposure Draft Proposed Statement of Financial Accounting Concepts - Using Cash Flow Information in Accounting Measurement. The comment letter is presented. Although they agree with much that is in the ED, the committee has 2 main suggestions that they believe will improve the document: 1. The 4 principles for using present value techniques to measure assets, and the 3 measurement objectives for liabilities do not constitute a complete framework for using cash flow information in accounting measurements. 2. There may be situations in which the objective to estimate either fair values of entity-specific values whenever possible cannot be achieved while maintaining a minimum acceptable level of reliability.