The
Comprehensive Business Reporting Model proposes 12 principles to ensure that financial statements are relevant, clear, accurate, understandable, and comprehensive (see below). Click to
Download the Comprehensive Business Reporting Model from the CFA Institute website. Click here for
Press Release (PDF 26k).
CFA Institute Centre for Financial Market Integrity
Comprehensive Business Reporting Model – Principles
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- 1. The company must be viewed from the perspective of a current investor in the company's common equity.
- 2. Fair value information is the only information relevant for financial decision making.
- 3. Recognition and disclosure must be determined by the relevance of the information to investment decision making and not based upon measurement reliability alone.
- 4. All economic transactions and events should be completely and accurately recognized as they occur in the financial statements.
- 5. Investors' wealth assessments must determine the materiality threshold.
- 6. Financial reporting must be neutral.
- 7. All changes in net assets must be recorded in a single financial statement, the Statement of Changes in Net Assets Available to Common Shareowners.
- 8. The Statement of Changes in Net Assets Available to Common Shareowners should include timely recognition of all changes in fair values of assets and liabilities.
- 9. The Cash Flow Statement provides information essential to the analysis of a company and should be prepared using the direct method only.
- 10. Changes affecting each of the financial statements must be reported and explained on a disaggregated basis.
- 11. Individual line items should be reported based upon the nature of the items rather than the function for which they are used.
- 12. Disclosures must provide all the additional information investors require to understand the items recognized in the financial statements, their measurement properties, and risk exposures.
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