NEWS RELEASE 05/29/08

US FASB and IASB Seek Views on Two Consultative Documents on the Conceptual Framework

The US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) today published consultative documents that seek public comment on two of the eight phases of their joint project to develop an improved conceptual framework. The objective of the project is to develop an improved conceptual framework that provides a sound foundation for developing future accounting standards.

Exposure Draft of Chapters 1 and 2 of the Framework

The first document published today is an Exposure Draft of chapters 1 and 2 of the framework. It seeks views on an improved objective of financial reporting, the qualitative characteristics of information provided by financial reporting and constraints on the provision of that information. The draft reflects the Boards' updated proposals in the light of comments received on an initial consultation document published in July 2006. The Exposure Draft now proposes that the objective of financial reporting is to provide financial information that is useful to present and potential equity investors, lenders and other creditors in making decisions in their capacity as capital providers. It also presents an improved description of ‘faithful representation', one of the qualitative characteristics that financial information should possess if it is to provide a useful basis for economic decisions.

Preliminary Views on the Reporting Entity Concept

The second document published today sets out the Boards' preliminary views on the reporting entity concept and related issues. Although the reporting entity concept determines some important aspects of financial reporting, the Boards' existing frameworks do not address it specifically. The Boards' preliminary views are:

• a reporting entity is a circumscribed area of business activity of interest to present and potential equity investors, lenders and other capital providers.

• control is the basis for determining the composition of a group reporting entity.

• consolidated financial statements should be prepared from the perspective of the group reporting entity.

The FASB and the IASB invite comments on both documents by 29 September 2008. They are available on their Websites, www.fasb.org and www.iasb.org. The Exposure Draft An improved Conceptual Framework for Financial Reporting: Chapter 1: The Objective of Financial Reporting and Chapter 2: Qualitative Characteristics and Constraints of Decision-Useful Financial Reporting Information and the consultative document Preliminary Views on an improved Conceptual Framework for Financial Reporting: The Reporting Entity are available for eIFRS subscribers from today. Those wishing to subscribe to eIFRSs should visit the online shop at www.iasb.org or contact:

Printed copies (ISBN for the set of two documents 978-1-905590-67-4)) will be available shortly, at £10.00 plus shipping, from the IASC Foundation Publications Department.

Press inquiries:

Neal McGarity, Director of Communications, FASB
telephone: +1 203 956 5347 email: nemcgarity@f-a-f.org

Mark Byatt, Director of Corporate Communications, IASB,
telephone: +44 (0)20 7246 6472, email: mbyatt@iasb.org

Sonja Horn, Communications Adviser, IASB,
telephone: +44 (0)20 7246 6463, email: shorn@iasb.org

Technical inquiries:

Sue Bielstein, Director of Major Projects, FASB
Telephone: +1 203 956 5356
Email: sqbielstein@fasb.org

Peter Clark, Director of Research, IASB
Telephone: +44 (0)20 7246 6451
Email: pclark@iasb.org

Jeff Johnson, Project Manager, FASB (phase A)
Telephone: +1 203 956 5359
Email: jjjohnson@fasb.org

Li Li Lian, Project Manager, IASB (phase A)
Telephone: +44 (0)20 7246 6486
Email: llian@iasb.org

Kimberley Crook, Technical Director - Accounting Standards, NZICA (phase D)
Telephone: +64 (0) 3 961 2413
Email: kimberley.crook@nzica.com

Notes for editors

About the conceptual framework project

The IASB and FASB added this project to their agenda in October 2004. The objective is to develop an improved common conceptual framework that provides a sound foundation for developing future accounting standards. Such a framework is essential to fulfilling the Boards' goal of developing common standards that are principle-based and internally consistent, and lead to financial reporting that provides the information capital providers need to make decisions in their capacity as capital providers. The new framework, which will deal with a wide range of issues, will build on the existing IASB and FASB frameworks and consider developments since those frameworks were created. The project is being undertaken in eight phases, of which four are currently active (phases A to D). The Boards are currently working on initial consultative documents for phases B and C, currently planned for publication in 2009.