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Conceptual Framework

Date recorded:

Process for assessing qualitative characteristics

The Board continued its discussion of a staff proposal on the process for assessing the qualitative characteristics of financial statements. A revised schematic of the process was presented and discussed. Some Board members were critical of the revised schematic and challenged various assertions made in the supporting material. At least one Board member preferred a hierarchical approach to the assessment of the characteristics, fearing that the process approach would become a means to achieve an excuse to avoid the consequences of the process (such as reporting assets or liabilities at fair value). Another Board member saw the process as an aid for standard-setters in setting accounting standards rather than preparers in developing accounting policies in the absence of an accounting standard.

The staff will develop their thoughts further as a result of the Board's input and reactions.

Will one set of objectives and qualitative characteristics meet the needs of all entities?

The Board discussed whether the objectives of financial reporting and the qualitative characteristics of financial statements were (or should be) the same for all types of entities. For example, should they be the same for both publicly-listed entities and SMEs?

Board members noted that the staff seemed to have confused comparability and consistency in some places and suggested that these areas be clarified. In addition, stewardship was (perhaps) more noticeable in the SME context than in the publicly-listed entity context.

Objectives of financial reporting

The Board held a brief discussion on the objectives of financial reporting. Much of the paper was not reproduced in the Observer Notes as it represents the draft Basis for Conclusions. Board members were asked whether they had any serious concerns with the material presented as the staff would prefer to be prepared for these when the topic is discussed at the joint IASB-FASB meeting next week.

Project status and plan

The Board held a brief discussion of the proposed project plan.

No decisions on the Conceptual Framework documents were made at this meeting, which was essentially a preparatory session for the joint IASB/ FASB meeting 24-25 October 2005.