1. The FASB’s Statement of Financial Accounting Concepts No. 8 (2010) and the IASB Conceptual Framework for Financial Reporting (2010) both removed “conservatism” (“prudence”) as a qualitative characteristic of useful financial information. Explain why this change was made in 2010, and use the work of Cooper (2015), to explain why “prudence” (“conservatism”) was restored within both the IASB’s Exposure Drafts for a revised Conceptual Framework for Financial Reporting and the final version of its Framework (IASB, 2018). Within the FASB’s own Conceptual Framework, should “conservatism” be reinstated as a qualitative characteristic of useful information if the desire is to produce “reliable” and “faithfully representative” information for users? Explain your answer using supporting quotes.
2. Using at least two direct in-text quotations from Young (2006), explain why the FASB and IASB’s conceptual frameworks both focus on a “narrow conceptualization” of three highly specific types of financial statement user. How does this limited view of users potential bias both the objectives of providing general-purpose financial statements and the type of information they include/prioritise? Within your answer, briefly discuss whether financial statements should also supply decision relevant and stewardship information for a wider range of userchos, such as employees and the public.