Status, Outstanding issues and next steps

The IASB was joined by the project staff from New Zealand and the FASB via video links.

The staff told the Board that the FASB is not yet in a position to move forward on Phase D because they are concerned that they did not fully understand the IASB's views and how they had reached those views. An IASB member noted that the IASB was not in agreement on the issues in Phase D. Consequently, it would be very useful to discuss with the FASB the areas of disagreement. The staff countered that they wanted to speak with both Boards in smaller groups first.

Parent entity approach

The staff asked the Board for guidance about whether a discussion of the parent entity approach should be included in the Discussion Paper for Phase D, and if so, how extensive that discussion should be.

Some Board members thought that although it is important to discuss the parent entity approach somewhere in the Conceptual Framework package, Phase D was not the place to do so. Others saw the parent entity issue as a consolidation project issue and preferred it be discussed in the forthcoming Discussion Paper on that topic. Several Board members noted that the parent entity approach had nothing to do with the boundaries of the reporting entity, which was the topic of Phase D of the Conceptual Framework.

The Board agreed to prepare a separate Discussion Paper on the parent entity approach. How best to do this was left in the hands of the staff, who will return with suggestions at a later meeting.

Consistency with the Consolidation Project

The Board decided to defer detailed discussion of this issue pending developments in the Consolidation project. Board members expressed the view that conclusions in the two Discussion Papers should be consistent.

Initial draft of the Discussion Paper

Although the staff did not ask the Board to discuss the initial draft of the Discussion Paper (not available to Observers), some discussion took place.

Much of the discussion surrounded whether parent-only financial statements could be 'general purpose external financial reports.' Several Board members thought that there can be only one set of general purpose external financial reports - the consolidated financial statements; all other financial statements are special purpose financial reports. However, other Board members thought that parent-only financial statements can be general purpose financial reports.

The Chairman asked for an indicative vote on this issue. Nine Board members thought that the parent and its subsidiaries should always be regarded as a single entity for the purpose of general purpose external financial reports, and that this principle could be elaborated either at the Concepts level or at a Standards level. The remaining Board members thought that there could be multiple entities within a group (for example, parent-only and group) that could prepare general purpose external financial reports.