The Possibility of Partial Accounting Standards.

Abstract ABSTRACT: This article recognizes that some accounting standard setters seek to solve specific accounting problems by reducing the number of permissible accounting treatments for some components of accounting in isolation from the procedures adopted for others. Standards generated in this way are labeled partial standards in this article which explores some of the conditions under which such an approach generates an optimal information system for an individual. The main concern is to determine a set of conditions required of an individual's utility function if a partial standards approach is to be successful in the above sense. These conditions are fairly restrictive and suggest that accounting authorities need to consider simultaneously standards which display any significant element of interdependence. This inquiry leads to a consideration of the implications of separable utility functions for accounting. The article also considers the promise that separable utility functions offers for the amelioration of the problem of the non-comparability of information structures.