IASB September 2007
Phase D Reporting Entity
The Board discussed sweep issues arising from comments received on the pre-ballot draft of a discussion paper on the reporting entity phase of the project.
Most of the comments related to the first section of the discussion paper, which focuses on general issues. As a result, the staff had redrafted that section, and included a revision of the description of a reporting entity as a circumscribed area of business activity of interest to present and potential investors and creditors. The Board agreed with how the staff had dealt with the comments, subject to some clarification.
The Board also confirmed that there were no further sweep issues to be discussed before proceeding to publication of the discussion paper.
Phase A Objective and Qualitative Characteristics of Financial Reporting
The Board discussed the role of stewardship in the objective of financial reporting and the exposure draft on The Objective of Financial Reporting and Qualitative Characteristics of Decision-Useful Financial Reporting Information. The Board tentatively decided:
The objective of general purpose external financial reporting is to provide financial information about the reporting entity that is useful to current and potential investors and creditors and others in making decisions in their capacity as capital providers. This objective will encompass information that is useful to owners acting in their capacity as owners as well as for investing and lending decisions.
The exposure draft should be structured as follows:
(a) The basic perspective underlying financial reporting is that of the reporting entity
(b) That perspective involves reporting on the entity’s resources (assets), the claims on the entity’s resources (liabilities and equity), and the changes in them.
(c) The primary user group comprises those who have a claim (or potentially may have a claim) on the entity’s resources—its present and potential equity investors and creditors (capital providers). Other potential users may benefit from financial reporting information, but they are not the focus of the objective.