Conceptual Framework

Date recorded:

Finalising the Conceptual Framework

The staff introduced the session by noting that most respondents to the exposure draft on the Objective and Qualitative Characteristics and the discussion paper on the Reporting Entity expressed concern that the Boards proposed to make each chapter of the Framework effective as it was balloted and published. These respondents urged the Boards to publish a single exposure draft after all chapters of the conceptual Framework are published (but not yet made effective) so that constituents can review and comment on the new Framework as a whole. The Board discussed these issues and the related staff recommendations.

The IASB agreed that it would amend IAS 8 paragraph 10 when the final chapter on Qualitative Characteristics is issued. The amendment would be treated as a separate project.

The FASB agreed in principle that, other than replacing CON 1 and CON 2, it would not make consequential amendments to other Concept Statements and would not make consequential amendments to other Statements.

The IASB confirmed its intention that the new framework would be effective for constituents a year from publication. There was some discussion about how to make this operational, but the intention was clear.

The IASB agreed that it would not make consequential changes to the rest of the existing Framework as a consequence of publishing the new chapters, except for the consequential amendments proposed in the Objective ED. The Boards also discussed whether, given that the Reporting Entity phase deals with several issues, some of which relate to the Objective Chapter (for example, what is a reporting entity or group reporting entity to which the objectives of financial reporting apply), it would be best to finalise the Objective Chapter and the Reporting Entity Chapter at the same time, possibly as an integrated chapter.

After discussion, the Boards agreed that the issues discussed in the Reporting Entity phase should be drafted as an independent Chapter and that the effective date for the Objective and Qualitative Characteristics chapters should be independent of the effective date of the Reporting Entity Chapter.

Purpose and Status of the Framework

The IASB agreed that the purpose and status of the Framework, as expressed in IASB standards, was appropriate for it and did not wish to amend where in its hierarchy it was placed.

The FASB agreed that, while it might wish to conform the US GAAP hierarchy with respect to the Framework to the position adopted by the IASB, it would wait until the project was completed. FASB members noted that the US GAAP hierarchy had only recently been amended and they did not wish to inflict two changes on their constituents in short order.

Not-for-Profit Entities and Government Business Entities

After a short discussion, the Boards agreed that they would defer consideration of not-for-profit entities and government business entities until the first four phases of the Framework project are completed.

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