Committee on Corporate Financial Reporting.

Abstract The article highlights the report of the Committee on Corporate Financial Reporting of the American Accounting Association. The charge of this committee is to identify, examine, and report contemporary problems in financial reporting; to recommend appropriate research projects as well as to critically evaluate both organized and individual proposals for research on financial reporting, and to issue broad position statements in specific areas when appropriate. In this approach, accounting data are used to attach subjective probabilities to previously developed quantitative estimates of relevant variables. For example, past turnover data, gross margin percentages, or rates of return on investment are calculated because they are thought to reflect managerial efficiency. Some take the position that changes in value of bonds held as long-term investments are irrelevant to the income of the holder of the bond if the changes are caused by changes in market interest rates. They point out that although the changes in interest rates affect the current market price of the bond, they do not affect the amounts or the timing of the future cash flows expected by the bond holder. Meaningfulness, like relevance, is difficult to define in specific terms for all readers of financial statements. Nevertheless, notes deserve careful screening by management to assure that they contain informative material.