The European Financial Reporting Advisory Group (EFRAG), together with the Financial Reporting Council (FRC) and the national standard setters of France, Germany and Italy have published two additional bulletins examining key elements of the proposed IFRS conceptual framework.
Getting a Better Framework: Accountability and the objective of financial reporting discusses whether financial statements should provide information that is useful for an assessment of management's accountability (or stewardship), and whether this objective is adequately reflected in the IASB's conceptual framework.
It suggests that the Accounting Standards Committee of Germany (ASCG) and the Organismo Italiano di Contabilité (OIC) believe that the IASB does address the importance and the role of accountability/stewardship. However, the Autorité des Normes Comptables (ANC) says this principal should be seen as the primary objective of financial reporting, a view shared by EFRAG and the FRC, who state that accountability should not be seen as merely ancillary to other objectives and call for this concept to be reinstated.
The second bulletin, Getting a Better Framework: The asset/liability approach considers whether the conceptual framework's approach of defining equity, income and expenses on the basis of the definitions of assets and liabilities is satisfactory. It looks in detail at several issues which have be the subject of debate, such as whether this approach implies that the presentation of information on income will be subordinated to information on assets and liabilities, whether it provides an appropriate basis for reporting performance, and whether it requires that all assets and liabilities are recognised, as well as concerns around statements of fair value.
The FRC, along with EFRAG, ASCG and OIC, are broadly supportive of the asset/liability approach as providing greater clarity for the development of accounting standards, but the ANC does not agree, maintaining that performance cannot be appropriately represented in the accounts if primacy continues to be given to the balance sheet.
Comments on both bulletins are invited by 15 November 2013, and FRC says feedback will be taken into account in developing European views in the IASB consultation process.
