Joint IASB and FASB April 2008

The boards continued to discuss the implications of adopting the entity perspective. This issue arose from the phases of the framework project on the objective of financial reporting (phase A) and the reporting entity (phase D). The boards confirmed that the entity perspective means that the entity itself is the subject matter of financial reporting. This is in contrast to the proprietary perspective where the proprietor is the subject matter of financial reporting and the reporting entity does not have substance of its own separately from its proprietors or owners.

The boards noted that they had not completed their initial deliberations in other phases of the framework project, such as determining the elements of financial statements (to be considered in phase B). Therefore, fuller implications of this decision for future phases will be analysed in other phases, in due course, and communicated to constituents at that time. The boards believe that these implications do not need to be addressed before finalising and publishing the exposure draft for phase A for public comment. An explanation on the decisions reached and implications not yet deliberated would be contained in the bases for conclusions in both the exposure draft for phase A and the discussion paper for phase D.

In addition, the boards discussed a sweep issue arising from comments on a draft discussion paper on the reporting entity (phase D) relating to parent-only financial statements. The boards tentatively agreed that in concept:

(a) a parent entity should always present consolidated financial statements.

(b) the presentation of parent-only financial statements should not be precluded at the conceptual level, provided they are included in the same financial report as the consolidated financial statements.

The boards also noted that some presentation issues, e.g. how to present information about particular subsidiaries, such as discontinued operations, will be dealt with at the standards level.