‘Why do accounting issues end up in the “too difficult” box?’ A practitioner view

Abstract

It is a pleasure to have the opportunity to react to Katherine Schipper ’ s thoughtful paper (Schip-per 2022). The IASB has always worked closely with academia and Katherine ’ s thought leader-ship has always been much appreciated. Katherine Schipper ’ s paper touches upon some of the most intractable accounting issues that have proven to be unsolvable over the years. She men-tions the distinction between liabilities and equity, performance reporting and other comprehen-sive income. These were indeed very tough issues which took up much of our Board time during my chairmanship without us being able to come up with a 100% perfect solution. Katherine gives two main reasons for such accounting issues remaining elusive. The fi rst underlying cause is the lack of clear conceptual solutions. Even when a conceptually grounded solution exists, a solution may not be feasible practically, for example when it requires so many subjective judgments and estimates that the resulting information is unlikely to be comparable. It can also be the case that the solution leads to fi nancial performance reporting outcomes that are viewed as inherently undesirable. In this respect Katherine refers speci fi cally to the widespread hostility to volatility in the income statement.