Last week the Financial Accounting Standards Board and the International Accounting Standards Board jointly released the Exposure Draft, Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Qualitative Characteristics and Constraints of Decision-Useful Financial Reporting Information. Chapter One focuses on the objective of financial reporting, and the Boards are seeking input on their decision to identify/present potential capital providers—including equity investors, lenders, and other creditors—as the “primary user group” for general purpose financial reporting. In addition, the Boards want feedback on the broadening of reporting objectives to encompass all decisions (resource allocation and investment) by these capital providers.
In Chapter Two (“Qualitative Characteristics and Constraints of Decision-Useful Financial Reporting Information”), the Boards distinguish between characteristics that are “fundamental”—relevance, faithful representation, and those that are “enhancing”—comparability, verifiability, timeliness, and understandability. Materiality and costs also comprise the most common constraints on financial reporting. The Boards want to know: How useful are these distinctions? Are they appropriately identified and defined? If not—why? All comments are due in writing by September 29, 2008, as per the introduction to the Exposure Draft. Also last week, the FASB released its Preliminary Views, Conceptual Framework for Financial Reporting: The Reporting Entity; comments are also due Sept. 29, 2008.
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