Conceptual Framework

Date recorded:

Status report

The Boards discussed progress on the various phases in the Conceptual Framework project and addressed issued raised by the staff. The staff reported that there were six substantive projects and two 'tasks' - the latter being the determination of authoritative status and the 'unifying phase'. The next due process document expected is the Chapter on the Reporting Entity, for which a pre-ballot draft is expected in May 2007, sweep issues in June, and a final Discussion Paper in July 2007.

Work on the assets and liabilities chapter is taking longer than expected, and the Boards have still to complete their initial deliberations on the asset definition and have not yet considered that for liabilities.

Project processes

The staff discussed the constraints that it is currently experiencing and the possible approaches to relieving those constraints to enable better progress to be made.

The principal constraint is the availability of staff. At present the conceptual framework staff is at least two or three full-time equivalents short and suitable staff members are either committed to other projects or not available at all. Therefore, a choice must be made: either accept that progress will be made more slowly than planned or else get creative.

One staff suggestion generated a significant amount of controversy. There was a suggestion that it might be possible to combine certain phases or due process documents. Several IASB members commented that, for IASB constituents, this would not be acceptable. The IASB was already under considerable pressure to slow down on the conceptual framework project and to have more consultation on all steps. It would simply not be possible to eliminate a due process step (especially a due process document).

The suggestion that there should be better coordination between the conceptual framework team and related standards-level teams also generated comment. Board members acknowledged that work on standards-level projects would inform the conceptual framework team and vice versa. However, no one particularly wanted to see a standards-level project delayed significantly because the conceptual framework project was not complete. However, there was also the danger that a standards-level project might suggest an approach that was contrary to the current direction of the related conceptual framework project. Board members suggested that judicious use of Board advisors and regular meetings between project teams were ways of avoiding both pitfalls.

Ultimately, the Boards gave their support to the staff directors to assign staff and schedule the projects as they thought best. Recruitment would continue. In addition, it was expected that the business combinations team would shortly complete their work and be available for other assignments.

The Boards also discussed the next stage for Chapter 1 (Qualitative Characteristics and Objectives of financial reporting).

After some discussion, it was agreed that the Boards should proceed to an Exposure Draft as scheduled. This Chapter would also help forthcoming standards-level projects and was becoming critical to the future work programme of the Boards.

There was a short discussion of the consideration of not-for-profit reporting issues and the conceptual framework project. While it was agreed that the insights provided by not-for-profit entities were often very useful, the Boards did not have the luxury to examine such issues: it was under pressure to develop the framework in the context of profit-seeking entities.

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