An Analysis of the IASB s Dissenting Opinions

Transcription

1 An Analysis of the IASB s Dissenting Opinions Michael E. Bradbury * and Julie Harrison** * Massey University ** University of Auckland This draft: 10 October 2012 Initial draft: 29 March 2012

2 An Analysis of the FASB s Dissenting Opinions ABSTRACT In this paper we report the results of a content analysis of dissenting opinions found in International Accounting Standards Board (IASB) standards. During 2002 to 2009 the IASB issued 26 financial accounting standards or amendments to standards. Twenty-five of these standards contained dissenting opinions. We identify and classify the arguments in the dissenting opinions using the methodology of Bradbury and Harrison (2012). We compare the results of this analysis to the analysis of the FASB dissenting opinions for the period 1981 to 2009 contained in Bradbury and Harrison (2012). The results show that the IASB standards are characterised by a higher rate of dissent reflecting the greater diversity of the IASB board. 2

3 An analysis of the IASB s Dissenting Opinions Introduction A large body of research has examined constituent participation and lobbying of International Financial Reporting Standards (IFRS) (e.g., Larson 2007, Georgiou 2010, Zeff 2010, Hansen 2011, Jorrison et al. 2012). Relatively fewer studies have examined the International Accounting Standard Boards (IASB s) due process. Fülbier et al. (2009) and Larson et al. (2011) examine the role of academia in standard setting. Howieson (2009) examines agenda formation. Whittington (2008) addresses the conceptual framework review. Larson and Kenny (2011) examine the financing of the IASB. Chatham et al. (2010) examine issues related to the development of international standards. Dissenting opinions to International Financial Reporting Standards (IFRS) are an important feature of the IASB s due process. Dissenting opinions demonstrate the transparency of due process by ensuring that all views have been considered. They improve arguments on existing standards, because the basis of conclusion must consider dissenting arguments and strengthen the counter arguments. In this study, we analyze the content of IASB dissenting opinions, with a focus on the arguments employed. That is, we apply content analysis to dissenting opinions and report arguments based on themes relating to concepts (conceptual framework and non-framework), logic, scope, outcome and due process. We also provide a comparative analysis and present the corresponding results for FASB dissenting opinions over the period 1981 to 2009 reported in Bradbury and Harrison (2012). An analysis of the arguments used in dissenting opinions ought to be useful in the revision of the conceptual framework, thereby improving future 3

4 decisions. The results for IFRS dissenting opinions are likely to differ from those of the FASB (Bradbury and Harrison 2011) for two main reasons. First, there is a difference in the level of authoritative support of the conceptual framework between the FASB and the IASB. While both the IASB and FASB use the Framework in the development of future standards, under IFRS the use of the Framework is embedded in the selection of, and changes in, accounting policies (i.e., IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, paragraphs 10-12). Second, the IASB has more diverse constituents than a national standard setter, such as the FASB (Tokar 2005). In the next section we raise conflicting hypotheses with regard to the frequency of dissenting opinions and the reliance on Framework arguments and non-framework conceptual arguments in dissenting opinions. Thus, it is important to examine IASB dissenting opinions, rather than rely on evidence from the results from FASB. This is even more important because the IASB/FASB joint programme has stopped and the IASB is continuing to develop its own Framework (IFRS Foundation 2012). The next section of the paper develops the research questions, describes the data and how we analysed the content of the dissenting opinions. Results are then presented including a comparison of the analysis of the IASB dissenting opinions to corresponding data reported in Bradbury and Harrison (2012). The paper concludes with a discussion of the relevance of this analysis for both the IASB current conceptual framework project. 4

5 Hypothesis Development, Method and Data Hypotheses Since the formation of the IASB in April 2001 it has assumed the role of global financial reporting standard-setter. IFRS issued by the IASB are now required or permitted to be used in more than 100 countries (IFRS Foundation 2011a), including most G20 countries, with the major exceptions being the US, China, India and Japan. A key ongoing challenge facing the IASB is demonstrating to stakeholders, notably the SEC, that it is a producer of high quality standards (Zeff 2012). The role of global standard-setter presents challenges for the IASB related to the growing diversity of its members and constituents (Tokar 2005). Initially the IASB was dominated by technical experts that were known to each other or had worked together previously as national standard-setters. Subsequent recruits were less likely to be known by the existing board, more likely to be users and not standard-setters, and were drawn from a wider pool of nations (Zeff 2012). Such diversity in the composition and experience of the board will inevitably create differences of opinions likely to impact the standard-setting process. Our first hypothesis (1A) is that greater diversity in the IASB membership leads to more conflict relative to a national standard-setter (i.e., the FASB). The IASB has been subject to criticism related to the standard-setting process in relation to potential bias and the impact of lobbying by constituents (Zeff 2002, 2012). Chatham et al. (2010) argue that the IASB s need for social approval can lead to greater flexibility in standards (i.e., more accounting choice is incorporated to appease constituents, resulting in lower quality standards). If this view is correct then as an alternative to 1A we hypothesize (1B) that high levels of flexibility within a standard are likely to be associated with lower 5

6 levels of dissent. Another argument giving rise to an expectation of a lower frequency of dissenting opinions is that the IASB was willing to sacrifice diversity in order to produce a volume of timely standards. We hypothesize (2A) that the higher authoritative status of the Framework provided by its recognition in IAS 8 will result in higher frequency of qualitative characteristics, than the FASB dissenting opinions. An alternative hypothesis (2B) is that the diversity of IASB membership will lead to greater differences of opinion on the importance (or weighting) of different qualitative characteristics and in non-framework conceptual arguments. Method and Data In this paper we identify and classify the arguments in the IASB dissenting opinions using the methodology of Bradbury and Harrison (2012), developed from Bennett et al. (2006) and Yen et al. (2007). This methodology uses content analysis to extract meaning from the dissenting opinions by identifying common themes, coding items of interest and analyzing coded text using statistical techniques (Bechtel, 1997). Dissenting opinions are first separated into dissenting issues (representing single, specific objections to standard) and then coded into dissenting arguments (using coding themes specified in Bradbury and Harrison 2012 and reported in Table 1 Panel A). Table 1, Panel B summarizes the relation between the dissenting opinion, dissenting issue and dissenting argument. We analyze all financial standards issued by the IASB as either IAS or IFRS since its inception in 2001 until June 2020 (n=26). 1 The termination date coincides with the departure 1 Copies of the dissenting opinions were obtained from IFRS Foundation (2011b). 6

7 of Sir David Tweedie, the initial chair of the IASB. The selected text for analysis is the dissenting opinion found in each accounting standard (n=25). The unit of analysis used is the dissenting issue. Each opinion can have multiple dissenting issues (n=56). The majority of dissenting opinions contained only one issue and the maximum is seven. Each issue can have one or more dissenting arguments (n=218) and one or more authors. 2 The dissenting arguments were coded using the taxonomy in Table 1, Panel B. For consistency with prior research, this taxonomy is the same as Bradbury and Harrison (2012), with minor modifications to reflect new arguments raised in the IASB dissenting opinions. To ensure the inferences drawn from our content analysis were systematic, explicitly informed and (ideally) verifiable (Krippendorff, 2004, 25) identification of dissenting issues and the coding of themes in dissenting arguments were performed by the two researchers independently. This coding was based on the agreed taxonomy/coding manual (see Appendix A). Any differences in coding by the two researchers were resolved by consensus. As an example of the coding process, the dissenting opinion to IAS 24 (related party disclosures) contains one dissenting issue related to an exemption for government-related entities. This issue is supported by three dissenting arguments coded as costs versus benefits ( remove the unnecessary burden of collecting data ), decision usefulness ( the need to inform investors ), and comparability ( no reason to make such a distinction ). 2 The author is the Board member who raises the dissenting issue. 7

8 Results Level of Dissent Table 1, Panel B details the number of standards and dissenting opinions analyzed. Only one standard did not have a dissenting opinion. This compares to 50 percent of FASB standards which have dissenting opinions (Bradbury and Harrison 2012). In addition, the number of dissenting arguments per dissenting opinion is higher for the IASB (8.76) than the FASB standards (7.01), as shown in Table 2. This provides support for hypothesis 1A that the diverse geographic and cultural backgrounds of the IASB standard-setters makes it relatively more difficult to achieve unanimous agreement compared to the FASB (a national standard-setter). The alternative hypothesis that flexibility in standards and consensus required to produce timely standards have comprised the debate (resulting in fewer dissenting opinion) is not supported. Summary of Arguments Table 2 summarizes the arguments in dissenting opinions coded in accordance with the taxonomy in Table 1. Conceptual, logic, scope and outcome arguments are the most common in IFRS dissenting opinions. From the 219 arguments raised in all dissenting opinions, 127 (58%) are conceptual arguments, 43 (20%) are logic arguments, and 17 (8%) are scope arguments. Similar frequencies are observed in dissenting opinion in FASB standards during the period 1991 to Relative to the FASB, the IASB dissenting opinions place a much greater emphasis on outcome arguments (9% compared to 7%) and less emphasis on due process arguments (2% compared to 5%). In relation to the second set of hypotheses, the results provide initial evidence that the difference in the status of the conceptual framework between the IASB and FASB is not significant enough to affect the relative weighting of the arguments used to object to standards, with most arguments related to accounting concepts and logic. 8

9 Analysis of Specific Arguments Conceptual Arguments Table 3 summarizes the conceptual arguments in the dissenting opinions. Panel A comprises framework qualitative characteristics ; Panel B framework other and Panel C non-framework. The most commonly argued qualitative characteristic is reliability (25 argument or 20% of total conceptual arguments, including the components of reliability). There are 6 arguments specifically referring to reliability and 19 arguments referring to the components of reliability (i.e., verifiability (0), neutrality (3), and faithful representation (16)). Comparability is the second highest argued qualitative characteristic with 19 arguments (15%), followed by decision usefulness (15), relevance and its components (11), cost-benefit (7), and understandability (2). The concepts of predictive value, feedback value, verifiability, materiality and completeness are not used. References to other parts of the conceptual framework are reported in Panel B of Table 3. Six general references to the framework are made, with nine specifically referring to definitions of elements of the financial statements and one to risks and rewards. The FASB s dissenting opinions have a similar distribution. Most qualitative characteristics are within + or 2% of the FASBs. The IASB dissenting opinions have relatively fewer arguments related to understandability 2% compared to 5%, more arguments related to decision usefulness (12% relative to 6%) and more arguments referring to the elements of financial statements (7% compared to 4%). 9

10 Non-framework conceptual arguments raised in dissenting opinions are reported in Panel C of Table 3. Popular non-framework arguments used in dissenting opinions relate to accounting objectives 3 (7), management intent (7) and complexity (6). Other arguments are practical difficulties (3) and conventional practice (2). Less popular arguments were also raised in relation to disclosure as a substitute for proper accounting (1), matching fair value amounts (1), objectivity/subjectivity (1), risk and rewards (1), transparency (1) and uniformity (1). The other arguments (2) cover a range of different concepts such as references to comprehensive income or capital maintenance that are infrequently mentioned. IASB non-framework conceptual arguments in dissenting opinions are similar to those in FASB opinions, except that management intent has higher frequency and other arguments are used less frequently. Logic Arguments Table 4 summarizes arguments that disagreed with the logic within a standard. Most of the arguments relate to the external consistency of the accounting treatment in other IASB and similar pronouncements (22). External consistency is concerned with the consistency with other IFRS. Arguments were also raised in relation to the internal consistency within the standards (8) and general claims about the lack of logic (13). The IASB dissenting opinions contain more logic arguments than the FASB, but the claims refer more generally to the lack of logic than identify specific internal inconsistencies. 3 Arguments that refer to the objectives of the IASB or standard setting in general are classified as other arguments reported in Table 8. 10

11 Scope Arguments Table 5 summarizes the scope arguments. In 5 (2) of these dissenting opinions the authors objected to a narrow (wide) scope. Other scope arguments relate to the inappropriateness (2) of the standard or that other projects (8) needed to be completed first (e.g., the projects considering the definition of a reporting entity (IAS 27) or lease accounting (IAS 17)). Most scope arguments in the FASB s dissenting opinions relate to inappropriateness. In comparison, the IASB are concerned with the completion of other projects. This is also consistent with the emphasis on external consistency in Table 4. Outcome Arguments Table 6 summarizes outcome arguments, where the author considers the standard will have a negative impact on the users of financial statements. The IASB has almost twice as many outcome arguments per dissenting opinion than the IASB. Furthermore, the arguments are very different. The most prevalent outcome arguments raised are that the standard provided no improvement (9) and was susceptible to earnings management (6). This is consistent with the high frequency of management intent observed in Table 3. Given that the IASB have no jurisdiction over the enforcement of IFRS, these dissenting opinions reflect a concern over enforcement. Due Process and Transitional Arguments The due process and transitional arguments are summarized in Table 7. Due process arguments relate to the process the IASB follows in implementing the standards. Transitional issues relate to the transitional provisions, or lack of them, contained in the standards. Due process arguments are infrequent (4) and less than half that of the IASB. This is perhaps surprising, given the transitional issues facing wholesale adoption of IFRS. This suggests that 11

12 the standard-setting processes followed by the IASB are generally regarded as robust by board members. Other Arguments Other arguments, summarized in Table 8, include residual arguments not elsewhere classified in the taxonomy. Only standard-setting objectives, related the IASB s or the accounting profession s role and objectives, are identified (8). Unlike the FASB, no evidence-based or personal belief arguments were identified. Overall, the results of the analysis of the specific arguments confirm our initial conclusion in relation to the second set of hypotheses, that the difference in the status of the conceptual framework between the IASB and FASB is not sufficient to significantly affect the relative weighting of the arguments used. Conclusion In this paper we report the results of a content analysis of dissenting opinions in International Accounting Standards Board (IASB) standards. All dissenting opinions (25) released by the IASB in the period 2001 to 2010 are analyzed. We also provide comparative data from FASB dissenting opinions (Bradbury and Harrison 2012). 4 From this analysis we make the following observations. A much higher proportion of IFRS 4 We acknowledge that this comparison is imperfect, because (1) different time periods and (2) different standards were issued. 12

13 standards have dissenting opinions (96%) compared to FASB (50%). This supports hypothesis 1A that board diversity reduces the consensus on issuing accounting standards. There is no support for the alternative arguments that accounting flexibility within standards or the need for timely set of standards increases consensus. However, the distribution of arguments across our taxonomy is similar between the IASB and IASB dissenting opinions. There is a slightly higher rate of conceptual arguments raised per dissenting opinion for IASB (5.08) relative to the FASB (4.14). However, there are similar proportions between framework and non-framework. Non-framework conceptual arguments in the IASB dissenting opinions are dominated by management intention, complexity and accounting objectives. Accordingly, we reject our second set of hypotheses that the difference in the status of the conceptual framework between the IASB and FASB will result in a higher level of arguments in relation to qualitative characteristics and to greater differences of opinion on the importance (or weighting) of different qualitative characteristics and non-framework conceptual arguments. The level of dissent in the IASB standard-setting process suggests the greater diversity of its members leads to higher levels of dissent compared to a national standard-setter, such as the FASB. However, this diversity does not appear to have a significant impact on the nature of the arguments raised by the IASB compared to the FASB. Further, very few due process arguments are raised in relation to the IASB standard-setting process. Therefore, the diversity of the board does not appear, of itself, to generate different demands on the standard-setting due processes. 13

14 Conceptual framework arguments (e.g., qualitative characteristics such as consistency and reliability) are the most frequently used arguments by both the IASB and FASB. There appears to be no significant difference in the rate these arguments are used, suggesting that the perceived status of the conceptual framework for both organizations is similar. Systematic use of non-conceptual framework arguments by the IASB (and FASB) suggests such concepts ought to be discussed and either accepted or rejected in any conceptual framework revision. Logic arguments are common for both the IASB and FASB, but the emphasis for the IASB is on external consistency with other IFRS. This many reflect greater pressure on the IASB to develop consistent standards, compared to a national standard-setter, for the purpose of promoting its processes as high quality and encouraging countries to adopt IFRS. 14

15 References Bechtel, R. (1997). Developments in computer science with application to text analysis. In C. W. Roberts (Ed.), Text analysis for the social sciences. Mahwah, New Jersey: Lawrence Erlbaum Associates Inc. Bennett, B., M. Bradbury and H. Prangnell (2006). Rules, principles and judgments in accounting standards. Abacus 42(2), Bradbury, M. and J. Harrison (2012). An analysis of the FASB dissenting opinions and the conceptual framework. Working paper. Chatham, M.D., Larson, R.K. and Vietze, A. (2010). Issues affecting the development of an international accounting standard on financial instruments. Advances in Accounting 26, Fülbier, R.U., Hitz, J. and Sellhorn, T. (2009). Relevance of academic research and researchers role in the IASB s financial reporting standard setting. Abacus 45(4), Georgiou, G. (2010). The IASB standard-setting process: Participation and perceptions of financial statement users. The British Accounting Review 42, Hansen, T.B. (2011). Lobbying of the IASB: An empirical investigation. Journal of International Accounting Research 10(2), Howieson, B. (2009). Agenda formation and accounting standard setting: Lessons from the standard setters. Accounting and Finance 49(3), IFRS Foundation (2011a). Annual Report London, United Kingdom: IFRS Foundation. IFRS Foundation (2011b). International Financial Reporting Standards IFRS 2011(Red Book). London, United Kingdom: IFRS Foundation. 15

16 IFRS Foundation (2012). IASB meeting summaries: IASB September Retrieved from Meeting-Summaries-and-Observer-Notes/Pages/IASB-Sep-2012.aspx (10 October 2012). Jorissen, A., Lybaert, N. Orens, R. and van der Tas, L. (2012). Formal participation in the IASB s due process of standard setting: A multi-issue/multi-period analysis. European Accounting Review, forthcoming. Krippendorff, K. (2004). Content analysis: An introduction to its methodology (2nd ed.). Thousand Oaks, California: Sage Publishers, Inc. Lamoreaux, M.G. (2011). New IASB leader embraces challenges. Journal of Accountancy (September 2011), Larson, R.K. (2007). Constituent participation and the IASB s International Financial Reporting Interpretations Committee. Accounting in Europe 4(2), Larson, R.K. and Kenny, S.Y. (2011). The financing of the IASB: An analysis of donor diversity. Journal of International Accounting, Auditing and Taxation 20(1), Larson, R.K., Hertz, P.J. and Kenny, S.Y. (2011). Academics and the development of IFRS: An invitation to participate. Journal of International Accounting Research 10(2), Orens, R. Jorissen, A., Lybaert, N., and van der Tas, L. (2011). Corporate lobbying in private accounting standard setting: Does the IASB have to reckon with national differences, Accounting in Europe 8(2), Roberts, C. W. (1997). A theoretical map for selecting among text analysis methods. In C. W. Roberts (Ed.), Text analysis for the social sciences (pp ). Mahwah, New Jersey: Lawrence Erlbaum Associates. Tokar, M. (2005). Convergence and the implementation of a sindle set of global standards: The real-life challenge. Accounting in Europe 2,

17 Whittington, G. (2008). Harmonisation or discord? The critical role of the IASB conceptual framework review. Journal of Accounting and Public Policy 27, Yen, A.C., E. Hirst, and P.E. Hopkins (2007). A content analysis of the comprehensive income exposure draft comment letters. Research in Accounting Regulation 19: Zeff, S.A. (2002). Political lobbying on proposed standards: A challenge to the IASB. Accounting Horizons 16(1), Zeff, S. A. (2010). Political lobbying on accounting standards US, UK and international experience. In C. Nobes and R. Parker (Eds), Comparative International Accounting (11 th ed.) Harlow, UK, Pearson, Zeff, S.A. (2012). The Evolution of the IASC into the IASB, and the Challenges it Faces. The Accounting Review 87(3),

18 TABLE 1 Coding of Argument Panel A: Taxonomy of Arguments Conceptual arguments conceptual arguments focusing on the deficiencies in the standard. These are classified as either conceptual framework qualitative arguments (e.g., qualitative characteristics of information), conceptual framework other arguments (e.g., definitions of elements of the financial statements) or nonframework arguments. Logic arguments - arguments that point out inconsistencies in the standard. These are classified as internal inconsistencies within the standard or external inconsistencies with other standards. Scope arguments - arguments suggesting that the scope of the standard is too narrow or too wide or the standard is not appropriate. Outcome arguments - arguments focusing on the impact of the standard on external users of financial statements (such as investors) or on internal operational decisions. Due process arguments - arguments focusing on due process, rather than the content of the standard. Other arguments - arguments not falling in one of the above categories. Panel B: Coding Hierarchy N Population IAS, IFRS Issued 26 Sample Text Dissenting Opinion 25 Unit of Analysis Dissenting Issue 56 Themes Dissenting Arguments

19 TABLE 2 Summary of Dissenting Arguments N IASB per DO % N FASB Per DO % Conceptual % % Logic % % Scope % % Outcome % % Due process % % Other % % Total % % 19

20 TABLE 3 Conceptual Arguments N IASB per DO % N FASB Per DO % Panel A: Framework Qualitative: Benefit > costs % % Understandbility % % Decision usefulness % % Relevance % % Predictive value % Feedback value 0 0 Timeliness % 0 Comparability % % Reliability % % Verifiability % Neutrality % % Faithful representation % % Materiality 0 0 Completeness % Total framework qualitative % % 20

21 TABLE 3 Conceptual Arguments (continued) IASB % N FASB Per % N per DO DO Panel B: Framework - Other: General reference % % Elements of the financial statements % % Total framework-other % % Panel C: Non-framework: Accounting objectives % % Complexity % % Conservatism % Conventional practice % % Disclosure is not a substitute for proper accounting % % Duality % Management intent % % Matching % Matching - Fair value % Objectivity/subjectivity % % Other % % Practical difficulties % % Risks & Rewards % Transparency % % Uniformity % % Total non-framework % % Total conceptual arguments % % 21

22 TABLE 4 Logic Arguments IASB FASB N N per DO % Per DO % External consistency % % Internal consistency % % Lack of logic % % Total logic arguments % % 22

23 TABLE 5 Scope Arguments N IASB per DO % N FASB Per DO % Narrow % % Wide % % Not appropriate % % Complete conceptual framework project % Complete other projects % % Total Scope Arguments % % 23

24 TABLE 6 Outcome Arguments N IASB per DO % N FASB Per DO % Bad accounting outcome % % Earnings Management % % Economic effects % No Improvement % % Public interest % 0 Valuation % Volatility % % Total outcome arguments % % 24

25 TABLE 7 Due Process Arguments N IASB per DO % N FASB Per DO % Due Process % % Transitional % % Total % % 25

26 TABLE 8 Other Arguments N IASB per DO % N FASB Per DO % Evidence-based standards % Standard setting objectives % % Personal Belief % Total other arguments % % 26

27 APPENDIX A Coding Scheme for Dissenting Arguments Category Coding Theme Description/ Terminology Panel A: Conceptual Arguments Cost-benefit Benefit > costs Data continuity Lack of significance Understandability Understandability Decision usefulness Informativeness Decision usefulness Obscures information Meaningful Useful Relevance Relevance Irrelevance Predictive value Predictive value Feedback value Feedback value Timeliness Timeliness Framework (qualitative characteristics) Comparability (and consistency) Comparability agree/ disagree Inconsistency Like with like transactions Like with like entities Reliability Reliability Verifiability Verifiability Neutrality Neutrality Evenhandedness Inequity Faithful representation Faithful representation Fact, economic reality Accounting fiction Misleading Economic substance Substance over form Nature and circumstances Underlying circumstances Materiality Materiality Completeness Completeness/ incompleteness 27

28 Category Coding Theme Description/ Terminology Conceptual framework reference General reference Framework Objective of the conceptual framework (other) Definitions of elements of Definitions of assets, liabilities, etc the financial statements Risks & rewards Risks Accounting Objectives Fails to achieve objectives Objective of accounting Objective of financial reporting Objective of financial standards Objective of the standard Complexity Complexity Conservatism Conservatism Prudent reporting Conventional Practice Conventional Practice Disclosure is not a substitute for proper accounting Disclosure is not a substitute for proper accounting Duality Duality matching across entities Management intention Management intention Matching Matching Non-Framework Matching Fair Value Fair value matching Objectivity/subjectivity Objectivity Subjectivity Practical difficulties Practical difficulties Unworkable Unfeasible Other Realization Additivity Fair Value Symmetry Capital Maintenance Comprehensive Income Transparency Transparency Uniformity Single method Uniformity 28

29 Category Coding Theme Description/ Terminology Panel B: Logic Arguments Consistency external External consistency External inconsistency Inconsistency in treatment between this Consistency standard and another standard (or similar) Consistency internal Internal consistency Inconsistency between paragraphs in the standard Illogical Illogical Unsound Irrational Lack of conceptual basis Lack of conceptual basis Arbitrary Arbitrary Arbitrary rules Lack of logic Adequacy of other Adequacy of other provisions provisions Lack of logic Lack of internal logic Lack of internal logic Incompatible premises Lack of reasoning Lack of reasoning Unjustified Fundamentally defective 29

30 Category Coding Theme Description/ Terminology Panel C: Outcome Arguments Internal Internal Impact Internal impact Bad accounting outcome Bad accounting outcome Earnings Management Earnings Management Economic effects Economic effects No Improvement Lack of improvement No improvement Does not use best available information Offsetting Offsetting External Public interest Public interest National economic policy issue Valuation Valuation Fluctuations Volatility Volatility Under-statements Over-statements 30

31 Category Coding Theme Description/ Terminology Panel D: Scope Arguments Narrow Narrow Narrowing advocated by standard Objection to a provision that narrows scope Objection to exemption, special provisions Should have addressed Insufficient guidance Wide Wide Widening advocated by standard Objection to a provision that widens scope Objection to inclusion Should include additional exception Objection to broader application Objection to inclusion Not Applicable Not Appropriate Inappropriate Importance of the issue Provision advocated by standard Objection to a provision applying Futility Lack of importance of the issue Urgency/lack of urgency Complete conceptual framework project first Conceptual framework complete project first Complete other projects first Complete other projects first Guidance not standard Guidance not standard required required 31

32 Category Coding Theme Description/ Terminology Panel E: Other Arguments Empirical argument Evidence-based Examples Evidence-based standards standards Lack of empirical evidence Lack of practical requirement Board s responsibilities Credibility Judgment by Board FASB Board s and Leadership in standard setting Standard setting Accounting Profession s Loss of initiative objectives Objectives Perceived threat to standard-setting Precedent-setting departure Professionalism Visibility Personal Belief Personal Belief Personal belief Panel F: Due Process Arguments Due Process Due Process Due Process No Public Submission Transitional Transitional Objection related to transitional provisions 32