Qualitative characteristics of financial reporting: a historical perspective

Purpose This paper aims to provide a historical review for several leading documents in relation to the objectives of financial statements. These documents are: The Trueblood Report , The Corporate Report , Making Corporate Reports Valuable ; and Guidelines for Financial Reporting Standards . These documents have a significant importance in financial reporting literature. Design/methodology/approach Content analysis approach was adopted in this study given its analytical and comparative nature of historical documents. In terms of studying historical data, content analysis main advantage is objectivity, in addition to its ability to provide unobtrusive evidence of historical trends. Findings The historical review showed that the basic objective of financial statements is concerned with providing useful information for economic decision making. In addition, it emphasized that information is useful when: it shows economic reality of the financial statements (i.e. balance sheet, income statement and cash flow statement); and it is relevant and reliable to users. Practical implications In view of the comparison and analysis above, the four documents emphasized on the usefulness of accounting for decision‐making purposes and as such it leads to an inference that accounts should essentially portray economic reality. Originality/value In light of current financial reporting failure, it is important to revise leading documents in relation to the objectives of financial statements and to evaluate current developments. This paper is of much value to the accounting profession, as well as to the corporate reporting setters.