IASB calls for feedback on proposed enhancements to the conceptual underpinning of financial reporting

 28 May 2015

The International Accounting Standards Board (IASB) today published for public consultation proposals to improve the Conceptual Framework for Financial Reporting.  The Conceptual Framework underpins International Financial Reporting Standards (IFRS) and helps the IASB to develop Standards that bring transparency, accountability and efficiency to financial markets around the world.

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

Having listened to feedback from parties affected by the IASB’s work, the Board is also proposing to 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 International Accounting Standards Board, 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 published today 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 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 commenting on the Exposure Drafts is 26 October 2015.

A ‘Snapshot’ providing a high-level summary of the key aspects of the Exposure Draft can be found here. On 17 June 2015 at 11am (London time) the IASB will hold a live webinar to introduce the proposals and answer questions.