NATURE OF FINANCIAL ACCOUNTING OBJECTIVES - SUMMARY AND SYNTHESIS

The nature and the specification of financial accounting objectives are issues that recently have received considerable attention. Nontrivial resources have been expended by public accounting firms and by the AICPA Objectives Committee, among others, in attempting to specify what these illusive objectives might, or should, be. There seems to be a consensus that the primary purpose of financial reporting is to provide information to financial statement users. Yet, the basic, fundamental role of objectives within this utilitarian, user-primacy framework remains obscure-largely, we speculate, because the problem of heterogeneous users has not been forcefully addressed. That is, explicit recognition of irreconcilable conflicts of interest among user classes (or users) provides the key element in defining the objectives issue. A basic purpose of this summary and synthesis, then, is to offer a view of the nature and role of financial accounting objectives that explicitly rests on heterogeneous users. The argument is presented in six stages. Initially, we provide a summary description of the problem of selecting among competing financial accounting alternatives. In the second section we explicitly formulate the user-primacy or utilitarian notion. Following this is a discussion of the basic nature of objectives. We then discuss the role of accounting research in this scheme, analyze the papers presented at this conference in terms of the framework developed, and finally explore some areas for further research on the objectives issue.