• Register
Return to: Home > News > IASB revises Conceptual Framework

IASB revises Conceptual Framework

The International Accounting Standards Board (IASB) has revised its Conceptual Framework for Financial Reporting that underpins IFRS Standards.

The Conceptual Framework sets out the fundamental concepts of financial reporting that guide the IASB in developing IFRS Standards. The framework is in place so the IFRSs are conceptually consistent and that similar transactions are treated the same way.

It aims to assist companies in developing accounting policies when no IFRS Standard applies to a particular transaction and it helps stakeholders to understand the IFRSs better.

The definitions of asset and liability have been refined for the purpose of clarity which has therefore led to income and expense to be redefined to reflect this change.

Asset has been clarified and is now defined as the economic resource and not the succeeding inflow of economic benefits.

Liability has been clarified so it is clear it is the obligation to transfer the economic resource and not the ultimate outflow of economic benefits.

The IASB stated in its Conceptual Framework Project Summary that this is due to make the recognition of assets more comprehensive as opposed to an increase in volume of the assets recognised. This is to give a better summary of an entity’s financial situation.

Other revisions to the Conceptual Framework include: a new chapter on measurement; guidance on reporting financial performance; and clarifications in important areas, such as the roles of stewardship, prudence and measurement uncertainty in financial reporting.

Amendments have been made to certain IFRSs which explicitly referenced the previous Conceptual Framework so that they now reference the revised Framework. These changes are not likely to have a significant impact on the IFRSs affected.

There are a few exceptions to this when the updated Conceptual Framework would affect IFRSs significantly. When following IFRS 3, Business Combinations, acquirers will be required to refer to the definitions of asset and a liability of the previous Conceptual Framework.

The updated Conceptual Framework will also not currently alter development of accounting policies for regulatory account balances applying IAS 8 Accounting Policies, Changing in Accounting Estimates and Errors to avoid entities revising those accounting policies twice within a short period of time.

The IASB will start using the revised Conceptual Framework immediately, whereas companies will use it from 2020.

 

By Joe Pickard

Top Content

    Accountancy Europe: the winner takes it all

    Jonathan Minter spoke to Olivier Boutellis-Taft, chief executive officer at Accountancy Europe, about how technology could change the industry, and how training needs to keep up to enable the profession to develop

    read more

    Embracing global technology trends

    Accountancy Europe’s Digital Day 2018 found the European accounting profession looking to tackle the challenges presented by new technologies head on. Jonathan Minter reports from the day

    read more

    IMA Conference: automation of the audit

    At the annual conference of the Institute of Management Accountants (IMA) in Indianapolis, Deloitte partner Alex Smith gave a presentation on digital transformation in the profession. Joe Pickard spoke to Smith following the presentation to find out more about his views on the future of audit

    read more

    IMA Conference: technology and the human effect

    The annual conference of the Institute of Management Accountants (IMA) took place in Indianapolis this year. Members of the profession gathered to hear the latest from the institute and other market players, covering some of the challenges and opportunities the profession faces.

    read more

    The Caribbean: a digital paradise

    The ICAC hosted its 36th annual conference in June this year – very much looking to the future following a tough 2017 for the Caribbean. Jonathan Minter spoke with chief executive officer Misha Lobban Clarke

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.