The International Accounting Standards Board (IASB) proposed changes to its conceptual framework, which provides a foundational underpinning for financial reporting under IFRS.
In an exposure draft, Conceptual Framework for Financial Reporting, the IASB proposes changes that would include:
- A new chapter on measurement, describing appropriate measurement bases (historical cost and current value, including fair value) and the factors to consider when selecting a measurement basis.
- Confirming that the statement of profit or loss is the primary source of information about a company's performance, and adding guidance on when income and expenses could be reported outside the statement of profit or loss in other comprehensive income.
- Refining the definitions of the basic building blocks of financial statements, including assets, liabilities, equity, income, and expenses.
- Placing more emphasis on the importance of providing information needed for investors to assess management's stewardship.
- Reintroducing an explicit reference to "prudence" and explaining clearly what it means.
The IASB plans to issue a final conceptual framework next year. Comments are sought by Oct. 26 and can be made at the IFRS website.
