FRC publishes draft Accounting Council advice on Conceptual Framework Exposure Draft

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23 Jul, 2015

The Financial Reporting Council (FRC) has published the tentative views of its Accounting Council on the International Accounting Standard Board’s (IASB’s) Conceptual Framework Exposure Draft.

The Accounting Council commenced consideration of the IASB’s Conceptual Framework Exposure Draft at its July meeting.  Tentative views were expressed in the following areas:

  • Stewardship, the business model, prudence and reliability
  • The Statement of Profit or Loss and Other Comprehensive Income 

The Accounting Council “welcomes” the changes that the IASB is proposing to make in relation to giving greater emphasis to stewardship, reintroducing an explicit reference to the notion of prudence and including a discussion of measurement uncertainty.  However a number of improvements are suggested specifically in the areas of stewardship, prudence and also a suggestion of reinstating the idea of reliability. 

The ED does not define profit or loss to provide a framework with what gets disclosed in profit or loss or other comprehensive income.  However, in providing a description of the purpose of the statement of profit or loss, the Accounting Council comments that this “is a useful first step”.  However it comments that the proposals should be based “upon a holistic and fundamental analysis of the concept of financial performance”.  The Accounting Council comments that in the absence of such an analysis (which would include clarification of terms such as ‘profit’, ‘return’ and ‘performance’) “there is no basis in the Exposure Draft’s proposals”. 

The press release and draft Accounting Council advice are available on the FRC website.

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