One of the primary topics of discussion among the accounting profession today continues to be around the topic of International Financial Reporting Standards (IFRS) and US GAAP convergence.
Even with convergence discussions continuing, the International Accounting Standards Board (IASB) published, on July 18, 2013, a discussion paper regarding proposals for revision of the existing Conceptual Framework. The Conceptual Framework sets out the underlying concepts for the preparation and presentation of financial statements for recognition and measurements in accordance with IFRS. Among other items, this discussion paper includes revising definitions of assets and liabilities, the distinction between equity and liabilities, defining other comprehensive income, and setting the framework for presentation and disclosure.
In 2011, after public consultation, the IASB determined that work on the Conceptual Framework was a priority in the eyes of many parties. Even the IASB has stated that some important areas are not covered by the current Conceptual Framework, and that many items are out of date and fail to meet the current thinking of the IASB.
Despite convergence being a hot issue in the industry, the IASB has now decided to undertake this project alone, without any partnership with FASB. The IASB believes that the revisions made will impact most, if not all, future projects to develop or revise IFRS. Revisions to the Conceptual Framework could very well affect ongoing convergence efforts, which would ultimately have a greater impact on a large percentage of the accounting profession.
The Discussion Paper is considered the first step towards revision of the Conceptual Framework. The IASB is currently accepting feedback via comment letters and outreach programs through January 2014, with the ultimate goal of issuing an exposure draft in 2014 and a finalized revised Conceptual Framework in 2015.
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