The Politics of Accounting Standards: A Comment on Ramanna's "Unreliable Accounts: How Regulators Fabricate Conceptual Narratives to Diffuse Criticism"

Abstract

Karthik Ramanna recounts how the Financial Accounting Standards Board (FASB) dropped "reliability"as a fundamental property of accounting in 2010. He offers two possible explanations for this change: (1) The FASB removed reliability to clarify its conceptual framework, and (2) It sought to reconcile its framework with the growing use of fair-value accounting. Ramanna does not give total victory to one explanation over another, nor does he assign purely public- or private-interest motives to the actors in the story. Yet this very ambiguity tells us a lot about the distinctive politics of accounting and other technical realms of regulation, and exposes some of the shortcomings of more standard interest-group models in political science.