Question

What is the current status of the IASB Conceptual Framework? Please provide background, recent developments, current status, and anticipated activities both near and long-term.

Answer 1

Answer1:- The International Accounting Standards Board (IASB) issued its 'Framework for the Preparation and Presentation of Financial Statements' in 1989. This is referred to as its conceptual framework.The framework sets out the concepts that shape the preparation and presentation of financial statements for external users. The framework does not have the status of an accounting standard as also is the case with the 'Statement of Principles' from the UK Accounting Standards Board (ASB). The IASB framework assists the IASB:

· 'In the development of future International Financial Reporting Standards and in its review of existing International Accounting Standards; and

· In promoting the harmonisation of regulations, accounting standards and procedures relating presentation of financial statements by providing a basis for reducing the number of alternative accounting treatments permitted by international standards.

Background:- The Conceptual Framework had been left largely unchanged since its inception in 1989. In 2004, the IASB and the FASB decided to review and revise the conceptual framework, however, changed priorities and the slow progress in the project led to the project being abandoned in 2010 after only Phase A of the original joint project had been finalised and introduced into the existing framework as Chapters 1 and 3 in September 2010.Phase D saw the publication of a discussion paper and an exposure draft but was never finalised. The Boards discussed Phases B and C quite extensively without any consultation document ever being issued, and Phases E to H largely remained untouched.During the 2011 agenda consultation many participants called for the IASB to reactivate and finalise the conceptual framework project given the multitude of open conceptual issues it is facing in many of its current projects. As a result, the IASB officially added the project to its agenda again in September 2012, this time as an IASB-only project and no longer aimed at a substantial revision of the framework but focused on those topics that are not yet covered (e.g. presentation and disclosure) or that show obvious shortcomings that need to be dealt with. As a first step, a Discussion Paper covering all aspects of the framework project was published in July 2013, followed by a comprehensive Exposure Draft in May 2015.

The International Accounting Standards Board (IASB) is the independent, accounting standard-setting body of the IFRS Foundation.The IASB was founded on April 1, 2001, as the successor to the International Accounting Standards Committee (IASC). It is responsible for developing International Financial Reporting Standards (IFRS), previously known as International Accounting Standards (IAS) and promoting the use and application of these standards.

December 31, 1920, The International Accounting Standards Foundation (IASF) was incorporated as a tax-exempt organization in the U.S. state of Delaware. On February 6, 2001, the International Financial Reporting Standards Foundation was also incorporated as a tax-exempt organization in Delaware. The IFRS Foundation is an independent, not-for-profit organisation. Its primary mission is to develop, in the public interest, a single set of high-quality, understandable, enforceable and globally accepted International Financial Reporting Standards (IFRS) based upon clearly articulated principles.

IFRS are developed by the International Accounting Standards Board (IASB), the independent standard-setting body of the IFRS Foundation. The IASB assumed accounting standard-setting responsibilities from its predecessor body, the International Accounting Standards Committee (IASC), on March 1, 2001. This was the culmination of a restructuring based on the recommendations of the report Recommendations on Shaping IASC for the Future.

The IASB forms part the three-tier structure employed by the IFRS Foundation and is responsible for setting the IFRS and related technical activities. The IASB is overseen by the Trustees of the IFRS Foundation, responsible for the organisation's governance, the appointment of IASB members and funding. The IFRS Foundation is publicly accountable to a Monitoring Board of capital market authorities.

Recent Development:- IASB revises the Conceptual Framework, The IASB has revised its Conceptual Framework. This will not result in any immediate change to IFRS, but the Board and Interpretations Committee will use the revised Framework in setting future standards. It is therefore helpful for stakeholders to understand the concepts in the Framework and the potential ways in which they might impact future guidance.

The primary purpose of the Framework is to assist the IASB (and the Interpretations Committee) by identifying concepts that it will use when setting standards.

Key changes include:
-Increasing the prominence of stewardship in the objective of financialreporting, which is to provide information that is useful in making resourceallocation decisions.
-Reinstating prudence, defined as the exercise of caution when making judgements under conditions of uncertainty, as a component of neutrality.
-Defining a reporting entity, which might be a legal entity or a portion of a legal entity.
-Revising the definition of an asset as a present economic resource controlled by the entity as a result of past events.
-Revising the definition of a liability as a present obligation of the entity to transfer an economic resource as a result of past events.
-Removing the probability threshold for recognition, and adding guidance on derecognition.
-Adding guidance on the information provided by different measurement bases, and explaining factors to consider when selecting a measurement basis.
-Stating that profit or loss is the primary performance indicator and that, in principle, income and expenses in other comprehensive income should be recycled where the relevance or faithful representation of the financial statements would be enhanced.

Anticipated Activities:-

The work plan sets out the Board's technical projects, highlighting the next milestone. Such projects include research, standard-setting and maintenance. They also include revisions to the IFRS Taxonomy.