EFRAG has issued its draft comment letter on the IASB Discussion Paper, A Review of the Conceptual Framework for Financial Reporting. Comments are requested by 31 December, 2013.
EFRAG welcomes that the IASB has initiated a project on improving its Conceptual Framework. European constituents, including EFRAG, have over the years repeatedly called for this revision to take place, before any fundamental change to the underlying IFRS accounting model would be made.
EFRAG therefore agrees with the high priority the IASB has given to this project and with the aim of completing the project within a few years. EFRAG appreciates the work that the IASB has done in analysing areas that have proven problematic in the past and supports the practical approach taken in the project.
However EFRAG does not agree with all of the proposed solutions and think that some of the issues should be addressed on a more conceptual basis.
EFRAG disagrees with the approach not to reconsider Chapters 1 and 3 of the existing Conceptual Framework as EFRAG does not support how the existing chapters are dealing with stewardship, reliability and prudence.
However, EFRAG appreciate the IASB’s preliminary view that financial statements can be made more relevant if the IASB considers how an entity conducts its business activities. Similarly EFRAG agrees that measurement should be based on how assets contribute to future cash flows and liabilities will be settled or fulfilled.
EFRAG also welcomes that the DP addresses the distinction between liabilities and equity but EFRAG does not support the proposals in the DP in relation to ‘wealth transfers’ to reflect changes in rights and obligations that may be settled by transfer of an entity’s equity instruments.
Press release
Draft comment letter
© EFRAG - European Financial Reporting Advisory Group
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