A descriptive analysis of select input bases of the Financial Accounting Standards Board




Brown, Paul R.

Journal Title

Journal ISSN

Volume Title



Preference input provided the Financial Accounting Standards Board (FASB) on select projects is examined to describe salient characteristics of that input. A research design is developed for describing any systematic groupings or relationships of input preferences, and any changes in groupings or relationships across projects. Correlational evidence is generated for describing any alignment between particular input preferences and FASB policy decisions. The data base can be summarized as follows. Of the various topics considered by the Board since its inception, nine primary topics are selected for analysis. Within those topics, responses only to the discussion memoranda are examined in all but one case. Exposure draft responses are analyzed for one topic because no discussion memorandum was issued. The analysis is limited to the responses of all those respondents who provided comments on at least seven of the nine projects. Finally, a set of policy questions is generated for each project. The respondents' positions on the policy questions are extracted from their submissions to the Board, and form the data base for the statistical techniques. Two statistical techniques are employed to evaluate the data base, multidimensional scaling (MBS) and discriminant analysis (DA). The techniques produce similar results. Both techniques indicate a moderate degree of preference homogeneity for two broad groups of respondents: preparers of financial statements, and attestors to financial statements. No other homogeneous groups are present based on similar preferences. The techniques also indicate similar findings regarding the FASB's relational position among the respondents. In the MDS maps, the majority of the time the FASB takes on an outlying position. The DA results convey that no consistent alignment is present for any particular group over all the projects. The techniques jointly refute any conclusion that the FASB's decisions consistently mirror either preparer or attestor preferences. These findings are of interest to several policy bodies. The FASB analyses are usually conducted on a project-by-project basis. On an ex post basis, this research provides an overview of a portion of its constituency base. The descriptive analysis provides the PASS with an indication of its responsiveness to particular parties interested in the accounting standards-setting process. The findings are also of Interest to Congress. Recently, certain committees in Congress have questioned the ability of the FASB to operate as an independent policy body. Nonalignment of FASB decisions with any group preferences can be interpreted as supportive of the Board's attempt to operate as an independent policy body.