Discussion Paper and comment letters—An improved Conceptual Framework: The Objective of Financial Reporting & Qualitative Characteristics of Decision-useful Financial Reporting Information


On 6 July 2006 the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) each published for public comment a consultative document setting out their preliminary views on the first two chapters of an enhanced conceptual framework. The draft chapters define the objective of financial reporting, and the qualitative characteristics of decision-useful financial information.

The document is the first to result from the boards’ joint project on the conceptual framework. This project was described in their Memorandum of Understanding published in February 2006, which laid out a joint programme of work for the FASB and the IASB. The work on the conceptual framework will inform both boards’ efforts to achieve the objectives described in the Memorandum of Understanding.

At present, the boards are each guided by their own individual framework. These differ from each other in various respects, are incomplete, and are not up to date. The publication of the boards’ joint preliminary views reflects their shared commitment to build upon, improve and achieve the convergence of their existing conceptual frameworks. The boards believe that a common conceptual framework will improve the foundation and concepts that underlie global financial reporting and serve as a more effective guide in developing global financial reporting standards.

The preliminary views restate the existing frameworks’ definition of the objective of general purpose external financial reporting as providing information that is useful to present and potential investors and creditors and others in making investment, credit and similar resource allocation decisions. The document also identifies relevance, faithful representation, comparability (including consistency) and understandability among the characteristics of financial information that make it decision-useful.

The Discussion Paper was open for comment until 3 November 2006.


Comment letters are public and all comment letters received on the due process document can be accessed below.

If you have trouble finding a specific comment letter, please contact us.

Access individual comment letters in the table below or download all letters as zip file.

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