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Conceptual Framework Project

Thursday, May 29, 2008

The conceptual framework project is a joint FASB/IASB project and will be accomplished in phases. There will be an exposure draft during the summer of 2006 dealing with the objectives of financial reporting and qualitative characteristics. Presently, there is no intent to make significant changes to the focus of financial reporting or the qualitative characteristics. In general, the framework should explain the consequences of decisions and help the public to react to exposure drafts with greater insight. With regard to cost/benefit considerations, there is likely to be greater emphasis on the benefit area, e.g., who will benefit from change and how users will use new information. With regard to the entity concept, comments received have been 95% against the concept. FRC members have expressed concern that standard setting is getting ahead of the conceptual framework. The FASB issued a preliminary views document in relation to the project on July 6, 2006 (see below). A comment letter was issued by the FRC on behalf of IMA addressing issues raised in the preliminary views document. The comment letter was issued on November 6, 2006. The FASB and IASB will hold roundtable discussions on measurement in conjunction with their joint conceptual framework project in three locations during January and February 2007. Two sessions in the U.S. will take place on February 1, 2007 from 9 a.m. to noon and from 1:30 – 4:30 p.m. at the FASB headquarters in Norwalk, Connecticut. Go on the FASB website at to register to participate in one of the sessions by November 17. Those selected to participate will be notified by e-mail by November 27. An update of the project can be found on the FASB website under Project Activities/Project Updates & Technical Plan/Conceptual Framework Project.

An exposure draft and a preliminary views document was issued on May 29, 2008 related to the Conceptual Framework project. The exposure draft is entitled: “The Objective of Financial Reporting and Qualitative Characteristics and Constraints of Decision-Useful Financial Reporting Information”. The preliminary views document is entitled, “The Reporting Entity”. Comment letters for both documents are due for submission on September 29, 2008. The documents can be found on the FASB’s website at under Exposure Documents.

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