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FASB, IASB seek input on framework for accounting standards
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NORWALK, Conn., June 2, 2008 -- The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have published consultative documents that seek public comment on two of the eight phases of their joint project to develop an improved conceptual framework.
The objective of the project is to develop an improved conceptual framework that provides a sound foundation for developing future accounting standards.
Exposure draft of chapters 1 and 2 of the framework
The first document is an exposure draft of chapters 1 and 2 of the framework. It seeks views on an improved objective of financial reporting, the qualitative characteristics of information provided by financial reporting and constraints on the provision of that information. The draft reflects the boards' updated proposals in the light of comments received on an initial consultation document published in July 2006.
The exposure draft now proposes that the objective of financial reporting is to provide financial information that is useful to present and potential equity investors, lenders and other creditors in making decisions in their capacity as capital providers. It also presents an improved description of ‘faithful representation', one of the qualitative characteristics that financial information should possess if it is to provide a useful basis for economic decisions.
Preliminary views on the reporting entity concept
The second document sets out the boards' preliminary views on the reporting entity concept and related issues. Although the reporting entity concept determines some important aspects of financial reporting, the boards' existing frameworks do not address it specifically. The boards' preliminary views are:
- a reporting entity is a circumscribed area of business activity of interest to present and potential equity investors, lenders and other capital providers;
- control is the basis for determining the composition of a group reporting entity;.
- consolidated financial statements should be prepared from the perspective of the group reporting entity.
The FASB and the IASB invite comments on both documents by Sept. 29, 2008. They are available on either the FASB Web site or the IASB Web site. The exposure draft "An Improved Conceptual Framework for Financial Reporting: Chapter 1: The Objective of Financial Reporting" and "Chapter 2: Qualitative Characteristics and Constraints of Decision-Useful Financial Reporting Information and the Consultative document Preliminary Views on an Improved Conceptual Framework for Financial Reporting: The Reporting Entity" are available for eIFRS subscribers. Those wishing to subscribe to eIFRSs should visit the online shop at or contact:
IASC Foundation Publications Department,
30 Cannon Street, London EC4M 6XH, United Kingdom.
Tel: +44 (0)20 7332 2730 Fax +44 (0)20 7332 2749
E-mail: publications@iasb.org
Web: http://www.iasb.org/
Printed copies (ISBN for the set of two documents 978-1-905590-67-4)) will be available shortly, at £10 plus shipping, from the IASC Foundation Publications Department.