As the International Accounting Standards Board (IASB) undertakes work that has the potential to shape the future of financial reporting across the globe, the International Federation of Accountants (IFAC) and the Institute of Chartered Accountants of Scotland (ICAS) have collaborated to encourage engagement and debate.
The joint IFAC/ICAS paper, Do We Need a Roadmap for Financial Reporting?, seeks to align the theoretical considerations with the practical ones, and generate debate and discussion that can assist the IASB as it begins to consider revisions to the existing Conceptual Framework. The IASB issued a Discussion Paper exploring possible changes to the IASB’s Conceptual Framework for Financial Reporting in July 2013. The comment period ended on January 14, 2014 and an exposure draft is expected to be published later this year. The IFAC/ICAS paper has been prepared to complement the individual comment letters that both IFAC and ICAS submitted to the IASB.
In the paper, IFAC and ICAS raise some fundamental questions and issues that should be considered by the IASB, including:
- Who are financial statements for?
- What is the purpose of financial statements?
- What role should the Conceptual Framework serve?
- What items should be included in assets and liabilities?
- What does ‘financial performance’ mean?
“These questions get right to the heart of how companies communicate with the financial markets,” said Fayez Choudhury, CEO of IFAC. “The basic building blocks of financial statements have existed for decades and it is important to undertake a serious assessment of whether they remain fit for purpose.”
Anton Colella, CEO of ICAS, said, “The Conceptual Framework sets the direction of travel for financial reporting globally. The IASB has stated that it will focus on ‘updating, improving and filling in gaps’ of the current Framework. Our overarching question is: is this sufficient or do we need a more fundamental re-think?”
The paper does not contain answers to all of these difficult questions, but aims to stimulate the debate and encourage those with a stake in financial reporting to engage and assist the IASB with its endeavour.
About ICAS
ICAS is a leading professional body for Chartered Accountants (CAs), with over 20,000 members worldwide. ICAS is an educator, regulator and thought leader.
About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.
Notes
The IFAC/ICAS paper, Do we need a roadmap for financial reporting? Developing the IASB’s Conceptual Framework, is available from the ICAS website at www.icas.org.uk/icas-ifac-roadmap and from the IFAC website at www.ifac.org/publications-resources/do-we-need-roadmap-financial-reporting.
Further information on the IASB’s Conceptual Framework project and the Discussion Paper: A Review of the Conceptual Framework for Financial Reporting is available at www.ifrs.org/Current-Projects/IASB-Projects/Conceptual-Framework/Pages/Conceptual-Framework-Summary.aspx.