EFRAG issues feedback statement on its research paper on the role of the business model in financial statements
04 Sep 2014
In December 2013, EFRAG, the French ANC and the UK FRC published a research paper 'The Role of the Business Model in Financial Statements'. They have now released a feedback statement with a summary of the comments received from the respondents.
The paper had concluded that the business model should continue to play a role in financial reporting, that it is time for a change to the current ad-hoc use and that the concept of the business model should be included in the Conceptual Framework with appropriate guidance for standard-setting.
Responses to the paper revealed that there is a general support for the view that accounting standards should mandate financial reporting that faithfully represents the business model. They also showed that the ad hoc implicit/explicit use of the business model notion is not welcomed as it is not always clear why in some cases the notion is used and in others not and as there is no consistency from standard to standard. Constituents also supported the view that the business model should be addressed in the Conceptual Framework. However, on all points views differed on how the intention could be achieved.
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