ACCA’s Global Forum for Corporate Reporting developed the detailed feedback to the IASB’s consultation, saying that the concepts of prudence and accountability need to be addressed and explained in this Conceptual Framework.
Richard Martin, head of corporate reporting at ACCA, comments: 'This Framework is important as it helps the IASB prepare, develop and revise IFRS in a coherent and consistent way.
'While accountability is referred to in the Framework, and prudence is built into the existing IFRS in a number of ways, both need to be given more importance in the Framework.'
ACCA broadly welcomes the proposals on measurement and the choice between different measures such as cost and market values as going a long way to providing appropriate guidance. This should help fill one of the major holes in the current framework.
However in another critical area – what should be part of profit for the year and what can be treated as other comprehensive income – more work needs to be done to develop definitions and principles. There are other gaps in the Framework where no concept or principle seems to be included – such as on the unit of account issue, de-recognition and disclosures.
Richard Martin adds: 'This is an unsatisfactory situation where important aspects of setting accounting standards are missing. We also need a more coherent definition of liabilities that brings together the approach to conditional liabilities, constructive liabilities and the implications of economic compulsion.'
ACCA’s response to the consultation can be found via the 'Related Link's section, left of this article.