Enhancements to IASB's conceptual framework
The International Accounting Standards Board (IASB) has published proposals to improve the Conceptual Framework for Financial Reporting.
The Conceputal Framework underpins International Financial Reporting Standards (IFRS).
The exposure draft proposes a number of enhancements to the Conceptual Framework.
- A new chapter on measurement that describes appropriate measurement bases (historical cost and current value, including fair value), and the factors to consider when selecting a measurement basis.
- Confirming that the statement of profit or loss is the primary source of information about a company's performance, and adding guidance on when income and expenses could be reported outside the statement of profit or loss, in "Other Comprehensive Income".
- Refining the definitions of the basic building blocks of financial statements – assets, liabilities, equity, income and expenses.
The IASB is also proposing to place more emphasis on the importance of providing information needed for investors to assess management's stewardship, and to reintroduce an explicit reference to "prudence", explaining clearly what it means.
The IASB plans to issue a final Conceptual Framework in 2016. It has published a separate exposure draft for public comment, Updating References to the Conceptual Framework, which proposes that references to the Conceptual Framework are updated in existing standards. Comments are required by 26 October 2015.