Conservatism in Accounting: A Reassessment

This paper examines how the concept of “conservatism” evolved in historical and contemporary accounting writings using authoritative professional and academic documents. The paper reviews the application of conservatism in the FASB and IASB conceptual frameworks. A brief discussion of empirical research on conservatism is provided. Finally, the paper looks at the declining influence of conservatism in private company accounting principles in three selected countries: Belgium, Switzerland, and Japan. Conservatism is found to be a perennial issue in accounting practice and accounting standard setting. This concept has long been embedded in private company accounting in different countries. Its rationale, along with its conflict with neutrality have been debated for centuries.