The Conceptual Framework

The comment letter expresses support for the Board’s decision to restart the Conceptual Framework project and to prioritise its completion.  It responds to the 26 questions/requests for feedback as outlined in the Discussion Paper.  Some of the specific comments communicated in the letter include:

• although we support prioritisation of the Framework, we caution that this project cannot (and should not) aim to address all issues that arise in developing standards
• while we welcome the fact that the discussion paper is quite comprehensive, we have noted some additional matters that should be considered and some that should be assessed in more depth
• we are of the view that ‘stewardship’ (accountability) is given insufficient prominence in the existing Framework and believe that it should be reinstated as an objective of financial reporting
• given that ‘prudence’ is a feature of both existing and forthcoming standards, we believe its role should be acknowledged in the Framework and that further work should be undertaken to assess the appropriate role of prudence in developing future standards, including the interaction with neutrality
• we consider that the reliability of measurement should be given a more prominent role in the context of recognition and in the selection of measurement bases
• while we understand the reasons why income and expenses are defined by reference to assets and liabilities (and why the Board generally favours this so-called asset and liability approach), we think it is appropriate to sometimes focus more directly on the income statement effects and suggest that a revised Framework should at least acknowledge the role of income- and expense-driven requirements in the recognition of assets and liabilities
• we believe the Framework should be a living document and therefore, updated and improved on a regular basis as the Board’s latest thinking develops in standards-level projects.