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Conceptual Framework Phase A — Objective and Qualitative Characteristics

Date recorded:

The Board discussed the second of three expected papers considering issues related to qualitative characteristics. In May, the Boards considered the qualitative characteristics of relevance and reliability (faithful representation). The Board discussed qualitative characteristics other than relevance and faithful representation.


The staff made the following recommendations:

  • Comparability is an important characteristic of decision-useful information and should be included as a qualitative characteristic in the converged conceptual framework.

The Board deferred a decision on this issue to the next meeting.

  • Comparability and consistency should be separately defined.

The Board agreed.

  • Relevance and faithful representation should have primacy compared to comparability and consistency.

The Board asked the Staff to rephrase this issue so that relevance and faithful representation would not be seen as 'trumping' comparability.

  • Disclosures can help to compensate when comparability or consistency is overridden by a greater need for relevance or faithful representation.

The Board agreed.

In addition to the above, Board members made the following points:

  • In practice, too much emphasis is placed on comparability, sometimes leading to incorrect accounting for the sake of comparability. In Japan, comparability is subsumed with faithful representation so as to de-emphasis it. Consequently, care should be taken to avoid 'contrived uniformity' as this is not comparability.
  • The staff were asked to strengthen the wording around comparability to bring a focus on structuring schemes. The message would be that, regardless of how transactions are designed, if the economic phenomenon is the same, the accounting should be comparable.
  • Consistency will be subsumed within comparability.


The staff made the following recommendations:

  • Users (including non-professionals as well as professionals) are assumed to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence.

While the Board agreed, the staff was asked to further explain who the intended user of IFRS is meant to be as this would assist the Board in determining the detail and sophistication of its literature.

  • Understandability is the quality of information that enables users to perceive its significance.

The Board agreed and added that information should be "capable of being understood."

  • Relevant information should not be excluded because it is too complex or difficult for certain users to understand.

The Board agreed.

  • Understandability is enhanced by the characterisation, aggregation, classification and presentation of financial information.

The Board agreed.


The staff made the following recommendations, which the Board agreed with:

  • Materiality relates to faithful representation, in addition to relevance.
  • Materiality should be considered as a screen or filter to determine whether information is sufficiently significant to influence decisions of users in the context of the entity, rather than a qualitative characteristic itself.

Other candidates for qualitative characteristics

Having discussed the qualitative characteristics that presently exist in the IASB and FASB frameworks, the Board discussed whether other characteristics should be added. Two characteristics were identified by the Staff and discussed by the Board:


In spite of its high profile use, the term transparent, is not a qualitative characteristic presently used or defined in any major accounting framework. The Board discussed this characteristic using the word 'succinctness' and concluded that this is subsumed within representational faithfulness therefore should not be a separate characteristic in itself.

True and fair

The staff recommended that true and fair should be considered as a component of representational faithfulness. The Board agreed.

Correction list for hyphenation

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