The Conceptual Framework issued by the IASB and the FASB in 2010 excludes the concept of transparency on the grounds that it adds nothing to the existing corpus of qualitative characteristics. This paper argues that incorporating the concept of process transparency into the Conceptual Framework would provide the necessary conceptual basis for raising the status of the Management Discussion and Analysis from a non-mandatory guideline to an accounting standard. This would further the Boards' stated public interest objectives of “fostering trust, growth and long-term financial stability” by requiring disclosure of how critical accounting estimates affect reported results and, at a broader level, how and why key strategic management decisions are made. The paper derives this recommendation from a review of notions of transparency and “black box” in the public finance and management literatures. We also analyze the viewpoints expressed in comment letters to the Boards' Discussion Paper and the Exposure Draft, which preceded the Conceptual Framework. In contrast to the Boards' stance we find that most respondents who address the issue of transparency favor its inclusion in the Conceptual Framework. Finally, based on Kuhn's (1970) The Structure of Scientific Revolutions, we seek to explain the Boards' objection to the new concept.
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