The FASB has issued a new chapter, “The Reporting Entity” (Chapter 2), of Concepts
Statement No. 8, Conceptual Framework for Financial Reporting.
In the new chapter, a reporting entity is described as “a circumscribed area of
economic activities that can be represented by general purpose financial reports
that are useful to existing and potential investors, lenders, and other resource
providers in making decisions about providing resources to the entity.”
The chapter also establishes that a reporting entity has three features:
“Economic activities have been conducted.”
“Those economic activities can be distinguished from those of other
“The financial information in general purpose financial reporting faithfully
represents the economic activities conducted within the circumscribed area
and is useful in making decisions about providing resources to the reporting
For more information, see the press release on the FASB’s Web site.