IASB February 2008

The Board discussed three issues that arose during the review of the pre-ballot draft of the forthcoming Exposure Draft on the objectives of financial reporting and qualitative characteristics of financial information. They are:

• How to address constituents’ concerns about the potential implications for the reporting entity phase and other phases of the project of selecting the entity perspective in developing the objective of financial reporting. Board members affirmed their agreement with the conclusion that general purpose financial reporting is directed at the reporting by an entity to its capital providers rather than reporting from the perspective of a particular class of capital providers. The Board noted, however, that some constituents have expressed the view that they have not been given a sufficient opportunity to debate the merits of the so-called proprietary perspective. The staff will prepare an analysis of the implications of selecting the entity perspective, which will be presented to the Board at a later date.
• Whether to use the term ‘accuracy’ or the term ‘free from error’ to describe a component of faithful representation. The Board expressed its preference for the term ‘free from material error’, which is not new to IASB constituents. Board members noted that the use of the term ‘accuracy’ has translation difficulties in some languages and also may not clearly convey the Board’s intention.
• How to strengthen the discussion of comparability in the conceptual framework. The Board affirmed the conclusion that comparability is an enhancing characteristic and provided suggestions for stressing the importance of comparability.