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The IASB and US FASB published consultative documents that seek public comment on two of the eight phases of their joint project to develop an improved conceptual framework.
The exposure draft of chapters 1 and 2 of the framework seeks views on an improved objective of financial reporting, the qualitative characteristics of information provided by financial reporting and constraints on the provision of that information.
It proposes that the objective of financial reporting is to provide financial information that is useful to present and potential equity investors, lenders and other creditors in making decisions in their capacity as capital providers.
It also presents an improved description of ‘faithful representation’, one of the qualitative characteristics that financial information should possess if it is to provide a useful basis for economic decisions.
The second document sets out the boards’ preliminary views on the reporting entity concept and related issues. The boards’ preliminary views are:
- a reporting entity is a circumscribed area of business activity of interest to present and potential equity investors, lenders and other capital providers.
- control is the basis for determining the composition of a group reporting entity.
- consolidated financial statements should be prepared from the perspective of the group reporting entity.
The documents will be available on this Website from
Deadline for comments is