New IFRS conceptual framework revises foundational reporting concepts

Written on Apr 05, 2018

A new conceptual framework for IFRS issued March 29 includes revisions to concepts for reporting assets, liabilities, income and expenses.

In completing the comprehensive project to change the conceptual framework, the International Accounting Standards Board (IASB) confirmed the objective of IFRS financial reporting as providing financial information that is useful to investors and others when deciding whether to provide resources to a company.

The conceptual framework emphasizes that investors need information about financial performance (income and expenses) as well as financial position (assets, liabilities, and equity). The framework also contains guidance for reporting financial performance.

As defined in the new conceptual framework, assets and liabilities focus on a company’s rights and responsibilities. The framework also states that financial statement preparers’ decisions about what information to report about assets, liabilities, income, and expenses should be based on what is useful to investors.

The conceptual framework is designed to ensure that IFRS are conceptually consistent and that similar transactions are treated in the same way, enabling the provision of useful information for investors and others. In addition, the conceptual framework helps companies develop accounting policies when no IFRS standard applies to a particular transaction.

The revised framework includes:

  • A new chapter on measurement
  • Guidance on reporting financial performance
  • New definitions and guidance

Clarifications on important areas such as the roles of stewardship, prudence and measurement uncertainty in financial statements.

Free supporting materials available

  • Project Summary providing a high-level introduction to the revised Conceptual Framework
  • Feedback Statement summarizing the Board’s response to the comments it received to its consultation on the proposals that led to the revised Conceptual Framework
  • Fact sheet outlining six short facts
Video featuring Hans Hoogervorst introducing the revised Conceptual Framework (also on Youtube)

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