The International Accounting Standards Board (IASB) has moved a step closer to the long awaited update of its conceptual framework for developing standards, with the publication of a discussion paper exploring possible changes.
In 2011, the IASB carried out an extensive public consultation which identified work on the conceptual framework as a high priority. This sets out the concepts that underlie the preparation and presentation of financial statements and identifies principles for the IASB to use when it develops and revises its IFRS.
The discussion paper on changes to the IASB's Conceptual Framework for Financial Reporting is intended to gain initial views and comments on a range of issues. These include definitions of assets and liabilities; recognition and derecognition; the distinction between equity and liabilities; measurement; presentation and disclosure; and other comprehensive income.
Hans Hoogervorst, chairman of the IASB said: 'This discussion paper gives people the opportunity to help us to shape the future of financial reporting by discussing the concepts that drive our work.'
The Financial Reporting Council (FRC) said it welcomed the publication of the discussion paper, which 'offers a once-in-a-generation opportunity for investors and directors to have an input into the direction of financial reporting standards for UK listed companies'.
Pointing out that the current framework largely dates from the 1980s, is incomplete and out of date, the FRC said it believes that 'any review should consider whether adequate emphasis is given to key principles of financial reporting including accountability, reliability and the exercise of caution'.
Roger Marshall, FRC board member and chairman of the FRC's Accounting Council said: 'The importance of getting the fundamentals of financial reporting right cannot be underestimated. It is vital that IASB develops a framework so that future accounting standards ensure that management can provide their investors with the information they need, in a way that is readily understandable.'
The discussion paper is available on the IASB website for comment until 14 January 2014. On 27 July 2013 the IASB is holding two live webcasts at 10am and 3pm London time.
The FRC, in conjunction with European partners, has published for comment a number of bulletins that address particular issues that arise in the context of the framework and will also be organising events to enable views to be expressed.
