IASB June 2007

The Board redeliberated issues related to the Discussion Paper (DP) Preliminary Views on an Improved Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Qualitative Characteristics of Decision-Useful Financial Reporting Information.

Regarding Chapter 1 of the DP, the Board tentatively decided the following:

• The objective established in Chapter 1 should pertain to financial reporting as a whole, not just to financial statements.
• The exposure draft should generally describe what is meant by financial reporting, but that specific decisions on the scope of financial reporting should be dealt with in Phase E of the Conceptual Framework project, Presentation and Disclosure, Including Financial Reporting Boundaries.
• By adopting the entity perspective in the DP, it intended to convey that an entity, not its owners and others having an interest in it, is the subject of general purpose external financial reporting. The Board noted that it did not intend to prejudge the potential applicability of the proprietary theory or the entity theory of the reporting entity. That issue will be decided in the reporting entity phase of the project.
• The primary user group consists of existing and potential investors and creditors.
• Government and regulatory bodies are potential users of financial reporting.

The FASB will discuss the issues at its meeting on 27 June. The IASB did not discuss respondents’ comments on stewardship; the IASB and the FASB plan to address the topic at a future meeting.

Regarding an outstanding issue related to Chapter 2 of the DP, the Board tentatively decided that timeliness should be removed as a component of relevance and instead described as an enhancing qualitative characteristic along with comparability, understandability and verifiability. The FASB reached the same conclusion at its meeting on 2 May.