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February 4, 2014

IASB’s framework needs all stakeholders’ input: ICAS and IFAC

The International Federation of Accountants (IFAC) and the Institute of Chartered Accountants of Scotland (ICAS) have called on the International Accounting Standards Board (IASB) to consider all stakeholders’ of financial statements in the debate over its Conceptual Framework in a jointly issued report.

The institutes noted that questions remained on whom exactly financial statements are for. According to the report, the range of stakeholders has expanded dramatically from when they were originally drawn up, and therefore requires the consideration of a broad range of perspectives and interests.

To this, the report added that the IASB needs to consider what role the statements are to serve, and whether they are understandable, adding this often gets pushed aside to deal with a specific issue, such as how to deal with lease accounting.

The preliminary consultation period on the conceptual framework ended on 14 January, before which date 30 respondents had highlighted concerns over missing concepts and the concept of prudence.

On the issue of prudence, the report suggests it "can be interpreted in very different ways. Its inclusion in the Conceptual Framework needs to be considered by the IASB, based on a very specific definition."

It also said the IASB should consider reinstating or emphasising the concept of ‘substance over form’, after it was removed from the original framework.

The report, which the institute said was to pose questions as opposed to provide answers, also questioned whether existing IFRSs would need revision.

In addition, it questioned whether global convergence could be achieved in accounting standards if major standard setters continued to develop their own conceptual frameworks.

Related story

IASB conceptual framework consultation ends with mixed responses

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