EFRAG draft comment letter on the conceptual framework discussion paper

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

27 Sep, 2013

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB's Discussion Paper (DP) containing proposals for topical areas where the IASB considers a revision and amendment of the existing Conceptual Framework necessary.

EFRAG agrees with the high priority the IASB has given to this project and appreciates the work that the IASB has done in analysing areas that have proven problematic in the past. While EFRAG supports the practical approach taken in the project aimed at completing the project within a few years, EFRAG does not agree with all of the proposed solutions and thinks that in some cases issues should be addressed on a more conceptual basis.

EFRAG's key comments are:

  • EFRAG disagrees with the decision not to reconsider Chapters 1 and 3 of the existing Conceptual Framework. EFRAG believes that especially the approaches regarding stewardship, reliability and prudence should be opened for discussion again.
  • EFRAG appreciates the IASB’s preliminary view that financial statements can be made more relevant if the IASB considers how an entity conducts its business activities.
  • EFRAG agrees that measurement should be based on how assets contributes to future cash flows and liabilities will be settled or fulfilled.
  • EFRAG also welcomes that the DP addresses the distinction between liabilities and equity but EFRAG does not support all proposals made in this connection.

EFRAG is giving the conceptual framework project a lot of attention and has found several ways of contributing to the discussion and of soliciting constituents views. A publication series has been developed that discusses issues that arise in the course of the IASB's project - so far seven of the Conceptual Framework bulletins have been published, among them bulletins on  accountability, reliability and prudence. EFRAG has also initiated a series of outreach events are being held across Europe to discuss the proposals in the DP.

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