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Conceptual Framework - Reporting entity (IASB)

Date recorded:

The Staff set out their proposed approach to be included in the Conceptual Framework discussion paper on the Reporting Entity.

The Staff noted that in 2008 there was a joint discussion paper (DP) with the FASB on the concept of the Reporting Entity concept.  This paper set out the IASB and FASB’s preliminary views on the reporting entity concept.  The Staff noted that the comments received on the DP were considered when the IASB and FASB developed the exposure draft Conceptual Framework for financial reporting – The Reporting Entity in March 2010.

The Staff noted that the exposure draft:

  1. Described a reporting entity and explained that a reporting entity need not be a legal entity and could be a portion of an entity;
  2. Stated that, if an entity that controls one or more entities prepares financial reports, it should present consolidated financial statements;
  3. Explained that ‘parent-only’ financial statements might provide useful information if they are presented together with consolidated financial statements.
  4. Stated that combined financial statements might provide useful information about the commonly controlled entities as a group.

The Staff noted that if work on the Conceptual Framework had not been suspended in November 2010, the IASB would have gone onto finalise proposals in the 2010 Reporting Entity ED.  The Staff noted that the 2010 ED could simply be redeliberated as the Conceptual Framework was finalised.  However they noted risks with this approach and consequently recommended to the Board that:

  • The Reporting Entity proposals are to be redeliberated (including comments received in the 2010 ED) next year as the Conceptual Framework is ED developed
  • The DP would include an appendix that:
    • Explained the proposed approach to the Reporting Entity
    • Summarised the content of the 2010 ED
    • Summarised the comment letters received

The Staff asked the Board whether they agreed with this approach.

No significant Board comments were received.  The majority of the Board members tentatively agreed to support the Staff proposals for the Reporting Entity in the DP.