Does the New Conceptual Framework Provide Adequate Concepts for Reporting Relevant Information about Performance?

Abstract

The basic question we raise in this paper is whether the 2013 Discussion Paper (DP 2013) on the Conceptual Framework provides adequate principles for reporting an entity's performance and what improvements could be made in the light of both user needs and evidence from academic literature. DP 2013 proposes to continue applying a balance sheet approach to financial accounting, whereby the income statement serves as a statement explaining changes in an entity's financial position. Performance is reduced to a discussion of possible approaches to defining other comprehensive income items and recycling. We conclude that the literature supports a more refined approach to communicating relevant attributes of performance, defining performance independently from assets and liabilities and taking into account various relevant disaggregations within profit or loss. We therefore propose a more balanced approach to financial reporting whereby the balance sheet and income statement are treated as equally important and the income statement gives more information about various relevant attributes of performance.

On the ‘Disclosure Initiative – Principles of Disclosure’: The EAA Financial Reporting Standards Committee’s View

“…In line with previous scholars (e.g. Brouwer, Faramarzi & Hoogendoorn, 2014), we support this approach, as we regard the four different statements to be of equal importance. The Balance Sheet approach, widely referred to in IFRS research articles (e.g.…”

“…For example, scholars have largely found support for the fact that the information in the primary financial statements is more prominent than information in the notes (see discussion in e.g. Brouwer et al, 2014). Despite this, we believe that some preparers of financial information may need clarifications.…”

“…The Balance Sheet approach, widely referred to in IFRS research articles (e.g. Abela et al, 2014;Brouwer et al, 2014) and embraced by the Conceptual Framework as the leading approach in standards development (Abela et al, 2014), gives the statement of financial position conceptual primacy compared to the other statements and it is therefore important, we believe, for the Board to clearly state that the four different statements are of equal importance.…”

What Is the Way Forward for IASB’s Research Programme under the Evidence-Supported Approach? Some Analyses and Comments Based on the 2015 Agenda Consultation

“…Research also find that the distinction between profit or loss and OCI adds value to financial reporting users (Goncharov and Hodgson, 2011;Rees and Shane, 2012;Mechelli and Cimini, 2014;Fasan et al, 2014;Brouwer et al, 2014;Lachmann et al, 2015). However, researchers are requesting a further clarification of the distinction between the two (Rees and Shane, 2012;Brouwer et al, 2014).…”

How Does the IASB Use the Conceptual Framework in Developing IFRSs? An Examination of the Development of IFRS 16 Leases

“…6 More specifically, we focus on three research questions (RQs) germane to standard setting based on the Framework. First, 5 Several papers focused on the conceptual analyses of the conceptual framework (Abela, Barker, Sommer, Teixeira, and André 2014;Barker 2015;Bauer, O'Brien, and Saeed 2014;Brouwer, Faramarzi, and Hoogendoorn 2014;Brouwer, Hoogendoorn, and Naarding 2015;Christensen 2010;Gebhardt, Mora, and Wagenhofer 2014;Macve 2010;Nobes and Stadler 2015;van Mourik 2014;Zeff 2013).…”