The Board discussed phases A, C and D of the project on the conceptual framework.
Phase A Objective of Financial Reporting
The Board reviewed responses to the exposure draft (ED) An improved Conceptual Framework for Financial Reporting: Chapter 1: Objective of Financial Reporting and tentatively reaffirmed the proposals in that chapter, including the proposals on the objective of financial reporting and the primary user group. The Board decided tentatively to amend the proposals in the ED as follows:
- to clarify that financial reports do not necessarily exclude forward-looking or prospective information. The description of an economic phenomenon should be amended to reflect this decision.
- to avoid using, when possible, the terms entity perspective, entity theory and proprietary perspective because they do not convey the boards� views.
The Board directed the staff to start drafting the final versions of the chapters on the objective of financial reporting and the qualitative characteristics of and constraints on financial reporting.
Phase C Measurement
The Board continued its discussion of factors that might be used to distinguish between items reported in the financial statements at current amounts and those reported at non-current amounts. The discussion focused on the factor of value realisation, which relates to the qualitative characteristic of relevance. No decisions were taken. The staff will continue to develop the approach to the use of value realisation as well as other factors relating to the qualitative characteristics.
Phase D Reporting Entity
The Board decided tentatively that
- the concept of control of an entity should be discussed at a high level in the conceptual framework
- the relationship referred to as �significant influence� does not constitute control of an entity
- the forthcoming exposure draft should not discuss proportionate consolidation
The Board instructed the staff to start drafting the exposure draft, cautioning that revisions may be needed when the Board discusses comments on ED 10 Consolidated Financial Statements, for which the comment period ended on 20 March