The International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB) today published consultative documents that seek public comment on two of the eight phases of their joint project to develop an improved conceptual framework.

The objective of the project is to develop an improved conceptual framework that provides a sound foundation for developing future accounting standards.

Exposure draft of Chapters 1 and 2 of the framework

The first document published today is an exposure draft of chapters 1 and 2 of the framework. It seeks views on an improved objective of financial reporting, the qualitative characteristics of information provided by financial reporting and constraints on the provision of that information. The draft reflects the boards’ updated proposals in the light of comments received on an initial consultation document published in July 2006.

The exposure draft now proposes that the objective of financial reporting is to provide financial information that is useful to present and potential equity investors, lenders and other creditors in making decisions in their capacity as capital providers.

It also presents an improved description of ‘faithful representation’, one of the qualitative characteristics that financial information should possess if it is to provide a useful basis for economic decisions.

Preliminary views on the reporting entity concept

The second document published today sets out the boards’ preliminary views on the reporting entity concept and related issues. Although the reporting entity concept determines some important aspects of financial reporting, the boards’ existing frameworks do not address it specifically. The boards’ preliminary views are:

• a reporting entity is a circumscribed area of business activity of interest to present and potential equity investors, lenders and other capital providers.

• control is the basis for determining the composition of a group reporting entity.

• consolidated financial statements should be prepared from the perspective of the group reporting entity.

The IASB and the FASB invite comments on both documents by 29 September 2008.

The exposure draft An improved Conceptual Framework for Financial Reporting: Chapter 1: The Objective of Financial Reporting and Chapter 2: Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information) and the consultative document Preliminary Views on an improved Conceptual Framework for Financial Reporting: The Reporting Entity are available on www.fasb.org and for eIFRS subscribers from today. The documents will be available on this Website from 2 June 2008.

Those wishing to subscribe to eIFRSs should visit the Web shop or contact:

IASC Foundation Publications Department,
30 Cannon Street,
London EC4M 6XH
United Kingdom.

Telephone:  +44 (0)20 7332 2730       
Fax: +44 (0)20 7332 2749
Email: publications@iasb.org

Printed copies (ISBN for the set of two documents 978-1-905590-67-4)) will be available shortly, at £10.00 plus shipping, from the IASC Foundation Publications Department.

Press enquiries

• Mark Byatt, Director of Corporate Communications, IASB
  Telephone:  +44 (0)20 7246 6472       
  Email: mbyatt@iasb.org
• Sonja Horn, Communications Adviser, IASB
  Telephone:   +44 (0)20 7246 6463       
  Email: shorn@iasb.org

Technical enquiries

Peter Clark, Director of Research, IASB
Telephone: +44 (0)20 7246 6451
Email: pclark@iasb.org
• Li Li Lian, Project Manager, IASB (phase A)
  Telephone: +44 (0)20 7246 6486
  Email: llian@iasb.org
• Sue Bielstein, Director of Major Projects, FASB
  Telephone: +1 203 956 5356
  Email: sqbielstein@fasb.org
• Jeff Johnson, Project Manager, FASB (phase A)
  Telephone: +1 203 956 5359
  Email: jjjohnson@fasb.org
• Kimberley Crook, Technical Director - Accounting Standards, NZICA (phase D)
  Telephone: +64 (0) 3 961 2413
  Email: kimberley.crook@nzica.com