The AICPA Accounting Standards Executive Committee (AcSEC) commented favorably on a partial draft of a conceptual framework for financial reporting being developed jointly by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). The framework, which consists of a common set of principles for developing accounting standards, is a key part of the boards’ moves toward convergence of their respective standards.
The FASB preliminary views document, titled Conceptual Framework of Financial Reporting: Objective of Financial Reporting and Qualitative Characteristics of Decision-Useful Financial Reporting Information, consists of the framework’s first two chapters. They deal with the objectives of financial reporting and the qualitative characteristics of financial reporting information that are useful in decision making, such as relevance, faithful representation, comparability and understandability.
AcSEC agreed with many of the draft’s provisions but made 10 recommendations, including that less complexity should be accorded a higher value in the conceptual framework. In addition, AcSEC said FASB should provide a more robust framework for how preparers and auditors should assess materiality.
To review the joint conceptual framework, visit www.fasb.org/project/conceptual_framework.shtml .
For the next phase of the project, FASB and IASB will hold roundtable discussions on measurement, concerning the value of assets and liabilities in financial reporting. The discussions, which will take place in Hong Kong, London and Norwalk, Conn., will focus on the list of measurement issues identified in the plan for the project’s measurement phase, the initial inventory of potential measurement bases prepared by the project staff and the terminology associated with that inventory.