The Exposure Draft proposes a number of enhancements to the Conceptual Framework, including:

• A new chapter on measurement that describes appropriate measurement bases (historical cost and current value, including fair value), and the factors to consider when selecting a measurement basis;
• Confirming that the statement of profit or loss is the primary source of information about a company’s performance, and adding guidance on when income and expenses could be reported outside the statement of profit or loss, in ‘Other Comprehensive Income (OCI)’; and
• Refining the definitions of the basic building blocks of financial statements - assets, liabilities, equity, income and expenses.

Having listened to feedback from parties affected by the IASB’s work, the Board has indicated that in future it will place more emphasis on the importance of providing information needed for investors to assess management’s stewardship, and to reintroduce an explicit reference to ‘prudence’, explaining clearly what it means.

Hans Hoogervorst, chair of the IASB, said: 'A solid Conceptual Framework is essential because it shapes the decisions the IASB takes when developing standards.

'Two particularly important areas of the proposals are the clarification of the key role of profit or loss as an indicator of a company’s financial performance, and the chapter that describes the information provided by historical cost and current value measurements.'

The long-awaited proposals were met with caution by the ICAEW, although they welcomed the return of an emphasis on 'prudence', an area which has stoked debate in the past. 

ICAEW head of financial reporting faculty, Dr Nigel Sleigh-Johnson said: It is critical that fundamental issues – the nuts and bolts of financial reporting – are not overshadowed by more controversial areas that have so far dominated the debate.

'For example, a lot of attention will, understandably, be directed towards areas like prudence, stewardship and reliability. These have been highly contentious in previous debates and are important; we are particularly pleased to see the proposed restoration in the framework of the concept of prudence in financial reporting.

'The IASB seems to have listened to what people have to say and to be moving in the right direction.'

The Conceptual Framework was last revised in 2010. In 2011, respondents to the IASB’s Agenda consultation called for the IASB to restart and prioritise revision of the parts that were not revised in 2010. The IASB has listened to that feedback and plans to issue a final Conceptual Framework in 2016.

The IASB has also published for public comment a separate Exposure Draft Updating References to the Conceptual Framework, which proposes that references to the Conceptual Framework are updated in existing Standards.

The deadline for comments is 26 October 2015.

A summary of the key aspects of the Exposure Draft is available here.

The IASB will hold a live webinar on the proposals and answer questions on 17 June 2015 at 11am. Further information is available here

The ICAEW is also planning to hold a joint event with the Financial Reporting Council (FRC) on 3 September to debate the issue with key stakeholders. Details of the event are available here