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Abstract
As core global accounting regulators, the IASB and the FASB have accorded much importance to the concept of decision-usefulness, particularly in the context of the investors as a specific user class. However, a indistinct reference to the usefulness of accounting information means nothing unless the efficacy being sought is properly defined. This paper reflects on the relevancy of decision-usefulness as a core financial reporting purpose from two perspectives. First, the ontology of accountaning with specific reference to decision-usefulness and utility versus ophelimity are considered. Second, epistemological problems around the quantification of accounting data and its predictive abilities are discussed. The article does not deny the importance of the usefulness criterion, but rather argues against a vacuous concept of decision-usefulness, which, as a key accounting and financial reporting objective, is devoid of any substantive meaning. Instead, a more realistic key objective of accounting should be to provide factual economic and financial information, which, since it presents any user with information in a unique company specific context, can be considered judgment-useful, rather than decision-useful.
Key words: accountancy, accounting ethics, decision-usefulness, financial reporting.
Introduction
In the recent dynamic, competitive business environment, quality decisions are inevitable, and according to Wild (2008) and Fellingham (2005), accounting is viewed as the measurement activity that provides financial reports in support of decision makers and their business decisions.
Under the IASB Meeting 2008 it was agreed that objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders and other creditors in making decisions in their capacity as capital providers. The conceptual framework of the US-based Financial Accounting Standards Board (FASB) maintains that a primary purpose of the financial statements is to provide information that is useful to investors and creditors in making their economic decisions (Williams, 2009; Young, 2006).
To be useful in making investment, credit, and similar resource allocation decisions, information must be a faithful representation of the real-world economic phenomena that it purports to represent. The phenomena represented in financial reports are economic resources and obligations and the transactions and other events and circumstances that change them. (FASB, 2006, Sec. 8)
Frankfurt (2006) argues that civilizations of a higher level must depend heavily...