Conceptual Framework Phase A — Qualitative Characteristics (Sweep Issues)
Sweep issues from the ballot draft
The following concerns were raised by Board members on the ballot draft:
- the objective of financial reporting as drafted implied that there were two objectives rather than one; and
- materiality is related to the relevance of financial reporting and is not a constraint of financial reporting.
The Boards were presented with a revised objective paragraph and additional paragraphs discussing user's needs and management's stewardship.
Several Board members responded that although they do not object to the proposed changes, they felt that the previous wording was simpler and more easily understood. A number of Board members did not support the new paragraph that dealt with management's stewardship.
One Board member noted that what was presented as the 'original' wording in the agenda papers was not, in fact, the wording that the Boards agreed too at a previous meeting. After a short discussion, the majority of Board members supported the proposed the staff's proposal subject to the wording being refined further and taking into account what the Boards originally agreed to as the objective of financial reporting.
Several Board members supported the proposal to relocate materiality as an aspect of relevance instead of a constraint. The Boards had a short discussion on the matter and by a large majority agreed with the staff's proposal. One of the Board members who did not support the proposal to relocate materiality is still considering whether to dissent from the final Standard.