Transparency and Understandability, But for Whom? How Different Standards Setters Define the 'Average User'

By Sid R. Ewer

The Federal Accounting Standards Advisory Board (FASAB) may have gotten it right when it decided that the U.S. government’s consolidated financial report should be “easily understandable to the ‘average citizen.’” In contrast, the words “average citizen” do not arise in FASB’s definition of the external user, the IASB’s conception nearly mirrors FASB’s, and GASB sets the bar even higher. In the author’s view, FASB and these other standards setters, perhaps without realizing it, are moving away from transparency. The FASAB venture, although difficult, is laudable —just as investors and creditors are stakeholders in a business enterprise, citizens are stakeholders in government. Other standards setters might take more than passing notice of the FASAB’s efforts.

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