IASB issues Exposure Draft for a revised Conceptual Framework

• The IASB has published a comprehensive ED containing proposals for areas in which it considers a revision of the Conceptual Framework necessary.
• At the same time, the IASB published a separate ED that proposes to update references to the Conceptual Framework in existing IFRSs. 
• The proposed revised Conceptual Framework contains the following eight chapters: 

– Chapters 1 & 2 – The objective of general purpose financial reporting and Qualitative characteristics of useful financial information: The IASB proposes to introduce guidance on stewardship, primary users, measurement uncertainty, substance over form and prudence; 

– Chapter 3 – Financial statements and the reporting entity: The IASB describes the role of financial statements and introduces proposals on definition, and the boundary of a ‘reporting entity’; 

– Chapter 4 – The elements of financial statements: The IASB proposes clearer definitions of assets and liabilities and more extensive guidance to support those definitions 

– Chapter 5 – Recognition and derecognition: The IASB proposes to clarify that only elements of financial statements can be recognised. To achieve recognition, the IASB sets out three criteria: relevance, faithful representation and the cost benefit restraint. The IASB further proposes providing clarification that derecognition requirements aim to represent faithfully the assets and liabilities retained after the derecognition event and the change in the entity’s assets and liabilities as a result of that event; 

– Chapter 6 – Measurement: The IASB proposes to describe different measurement bases and factors to consider when selecting a measurement basis; 

– Chapter 7 – Presentation and disclosure: The IASB proposes high level concepts that describe what information is included in financial statements and how that information should be presented and disclosed as well as guidance on reporting financial performance, including the use of other comprehensive income; and 

– Chapter 8 – Concepts of capital and capital maintenance: The IASB does not propose any changes to this material. 

• Comments on the proposals are due by 26 October 2015.

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