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AcSB Response – Conceptual Framework for Financial Reporting

  • IFRS - AcSB Image

Dec 08, 2015

On December 8, 2015, the Accounting Standards Board (AcSB) submitted a comment letter responding to the IASB’s Exposure Draft issued in May 2015.

The AcSB responded to the following IASB documents:

Exposure Draft – Conceptual Framework for Financial Reporting – May 2015

The AcSB letter strongly supports the high priority given to this project by the IASB.  The letter supports many aspects of the proposed Conceptual Framework including the positioning of stewardship within the discussion of the objective of financial reporting, the reintroduction of an explicit reference to substance over form, and the element definitions.  However, the letter notes that a significant amount of thought, analysis, discussion and education is needed to develop measurement concepts and principles that will be useful and effective.  As a result, the letter urges the IASB to add a research project on measurement to its agenda.  Also, the letter expresses concerns with a number of the proposals including those on prudence, derecognition, transactions with holders of equity claims and the rebuttable presumption regarding reclassifying certain amounts to profit or loss from other comprehensive income.  Read the AcSB letter posted by the IASB.

Exposure Draft – Updating References to the Conceptual Framework – May 2015

The AcSB letter agrees with the proposed amendments because they are necessary to provide a transition period for entities that have used the Conceptual Framework.  Read the AcSB letter posted by the IASB.

Discussion Paper – A Review of the Conceptual Framework for Financial Reporting – July 2013

The AcSB letter strongly supports a project to complete the IASB’s Conceptual Framework.  The letter emphasizes that the Conceptual Framework should be focused at the conceptual level and should include only concepts that have a sound theoretical basis in order to provide an integrated set of concepts that is useful.  The letter specifies which concepts should be part of the Conceptual Framework and the other material that, where relevant, should be dealt with outside of the Conceptual Framework. The letter recommends completing, in the proposed timeframe, the topics on asset and liability definitions, recognition and derecognition because they are well advanced and would be of significant benefit in moving forward some important standard-setting projects.  However, the topics on liabilities and equity, measurement, presentation and disclosure, and other comprehensive income, require significant further development.  The letter proposes that additional targeted research start as soon as possible. Read the AcSB letter posted by the IASB.

Exposure Draft – Conceptual Framework for Financial Reporting: The Reporting Entity – March 2010

The AcSB letter supports the IASB’s proposed definition of a reporting entity. The letter recommends that the concept of control be explicitly incorporated within the definition to identify the boundaries that define a reporting entity. Also, the letter recommends that the nature of the entity’s business activities demonstrate the unit-of-account to be used to account for entities the reporting entity controls. The AcSB staff letter posted by the IASB is available here.

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