The Historical Evolution from Accounting Theory to Conceptual Framework in Financial Standards Setting

C. Richard Baker, PhD, CPA, and Alain Burlaud

In BriefDuring the first half of the 20th century, few official bodies were dedicated to the promulgation of financial accounting standards, and accounting theory provided the primary basis for accounting education. Since the second half of the 20th century, however, the guidance issued by national accounting standards setting bodies has formed the primary basis for the practice and teaching of accounting. At present, the role of accounting theory and of national accounting standards setting bodies is beginning to diminish in the wake of the movement toward uniform international accounting standards. However developed and implemented, accounting standards can shape the behavior of businesses, governments, and individuals. This article traces the historical evolution of standards setting from accounting theory to conceptual framework, and explores some consequences of this evolution.