EFRAG and European National Standard Setters publish their strategy regarding the IFRS Conceptual Framework

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

06 Feb 2013

The European Financial Reporting Advisory Group (EFRAG) has posted to its website a strategy document entitled 'Getting a Better Framework – Our Strategy' that was developed in cooperation with the French Autorité des Normes Comptables (ANC), the Accounting Standards Committee of Germany (ASCG), the Organismo Italiano di Contabilità (OIC) and the UK Financial Reporting Council (FRC). The aim of the document is to ensure ultimately that the IASB's Conceptual Framework for Financial Reporting reflects an underlying accounting model that European stakeholders believe is conducive to robust and effective financial reporting standards.

After publishing the Conceptual Framework for Financial Reporting 2010 on 28 September 2010, incorporating Chapter 1 and Chapter 3 of the planned new Conceptual Framework, the IASB effectively deferred further work on the joint project with the FASB in late 2010 until after other more urgent convergence projects were finalised. As a result of the IASB's Agenda Consultation project, the IASB decided in September 2012 to reactivate the Conceptual Framework project as an IASB-only comprehensive project.

Because of the paramount importance of the new Framework for the development of new standards and the revision of existing standards and the fact that it will have to be considered when dealing with issues that are not addressed in the standards, the new Framework will have long lasting and substantial influence. Therefore, EFRAG, ANC, ASCG, OIC and FRC want to make sure the European views are among those considered in the development. The strategy document published today aims at

    1. illustrating some of the major issues that will arise in the process of developing the new Framework,
    2. explaining the standard-setters' strategy for engaging with the IASB in its development of the new Framework, and
    3. encouraging others within Europe to engage in the development of the new Framework.

    In order to illustrate some of the issues the framework needs to deal with the strategy document asks several questions:

    • Should stewardship (or accountability) be considered when developing accounting standards?
    • Is there adequate emphasis on the importance of prudence and reliability?
    • Will it be required to recognise all assets and liabilities?
    • Will the Framework lead to appropriate selection of measurement bases, or will it specify an ‘ideal’ measurement basis such as fair value?
    • How should performance be defined?

    At least some of these issues EFRAG feels will provoked some controversy, yet at the same time EFRAG believes the IASB will welcome positive suggestions made in a constructive spirit. According to EFRAG, restarting work on the Conceptual Framework might also be seen as an opportunity to review the 2010 Chapters, especially since the project has now moved from a joint project to an IASB only project.

    As for the way forward, EFRAG has announced a new way of informing and engaging its constituents:

    We intend to publish Bulletins, available through the websites of organisations in the partnership, which will discuss the issues that arise in the course of the project, explain their importance and seek constituents’ feedback. This will provide an update on the work of the partnership and of the IASB. We expect Bulletins will be relatively short, and confine themselves to the key messages. Concise, well-argued papers are likely to be both more influential and accessible than extensive treatises.

    Bulletins will provide a discussion of issues in order to stimulate debate. The comments received on the Bulletins will be considered in developing our views. We shall also ensure that all comments are drawn to the attention of the IASB.

    EFRAG will of course also rely on outreach events at which views can be exchanged and debated in person. Furthermore, a specific newsletter will be developed, to keep European constituents informed of how the debate with the IASB and other stakeholders worldwide progresses.

    Please click for the following information on the EFRAG website:

    Correction list for hyphenation

    These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.