Conceptual Framework for Financial Reporting

1 AASB exposure draft ED 264. June 2015. Conceptual Framework for Financial Reporting Comments to the AASB by 5 October 2015. Commenting on this AASB exposure draft Constituents are strongly encouraged to respond to the AASB and the IASB. The AASB is seeking comment by 5 October 2015. This will enable the AASB to consider Australian constituents' comments in the process of formulating its own comments to the IASB, which are due by 26 October 2015. Comments should be addressed to: The Chair Australian Accounting Standards Board PO Box 204. Collins Street West Victoria 8007. AUSTRALIA. All submissions on possible, proposed or existing Financial Reporting requirements, or on the standard-setting process, will be placed on the public record unless the Chair of the AASB. agrees to submissions being treated as confidential.

2 The latter will occur only if the public interest warrants such treatment. Submissions are to be lodged with the AASB via the Submit comments to AASB' button for the proposal document on the Work in progress open for comment' page of the AASB. website ( ). Please lodge your submission as a PDF document. The AASB. prefers that a Word document also be lodged, for internal use only. Respondents to the IASB are asked to send their comments electronically to the IFRS. Foundation website ( ), using the Comment on a proposal' page. Enquiries Phone: (03) 9617 7600. E-mail: COPYRIGHT. Commonwealth of Australia 2015. This document contains IFRS Foundation copyright material. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgment of the source.

3 Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to The Director of Finance and Administration, Australian Accounting Standards Board, PO Box 204, Collins Street West, Victoria 8007. All existing rights in this material are reserved outside Australia. Reproduction outside Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use only. Further information and requests for authorisation to reproduce for commercial purposes outside Australia should be addressed to the IFRS Foundation at ISSN 1030-5882. ED 264 ii COPYRIGHT. AASB REQUEST FOR COMMENTS. In December 2013, the Australian Accounting Standards Board (AASB) made revisions to the AASB Framework for the Preparation and Presentation of Financial Statements (AASB Framework ) to incorporate Chapters 1 and 3 of the International Accounting Standards Board's (IASB) Conceptual Framework for Financial Reporting , as issued in September 2010.

4 In anticipation of further revisions to the IASB Conceptual Framework , the AASB at that time decided to retain the existing AASB Framework , amended to the extent necessary to incorporate the IASB's Chapters 1 and 3 as an Appendix to the Framework , rather than issue a new Framework document. This exposure draft incorporates the IASB's proposals for a revised Conceptual Framework that are intended to improve Financial Reporting by providing a more complete, clear and updated set of concepts. The exposure draft : (a) addresses more areas than the existing Conceptual Framework and addresses some areas in greater detail the areas addressed are: (i) measurement;. (ii) Financial performance (including the use of other comprehensive income);. (iii) presentation and disclosure;. (iv) derecognition; and (v) the Reporting entity.

5 (b) seeks to clarify some aspects of the existing Conceptual Framework , including in relation to: (i) the information needed to meet the objective of Financial Reporting includes information that can be used to help assess management's stewardship of the entity's resources;. (ii) the roles of prudence and substance over form in Financial Reporting ;. (iii) when a high level of measurement uncertainty can make Financial information less relevant;. (iv) considering the important recognition and measurement decisions on the nature of the resulting information from both Financial performance and Financial position perspectives; and (v) the definitions of assets and liabilities, including more extensive guidance to support those definitions; and (c) seeks to update the parts of the existing Conceptual Framework that are out of date; for example, the role of probability in the definitions of assets and liabilities.

6 As the exposure draft is expressed from the perspective of for-profit entities, the AASB. intends to consider whether the proposals are suitable for application by not-for-profit entities. As part of that process, the AASB expects to have regard to the International Public Sector Accounting Standards Board's (IPSASB) Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities (IPSASB Conceptual Framework ), which was issued in October 2014. ED 264 iii REQUEST FOR COMMENTS. In light of the AASB's policy of incorporating International Financial Reporting Standards (IFRSs) into Australian Accounting Standards, the AASB is inviting comments on: (a) any of the proposals in the attached IASB exposure draft , including the specific questions on the proposals as listed in the Invitation to Comment section of the attached IASB exposure draft ; and (b) the AASB Specific Matters for Comment' listed below.

7 Submissions play an important role in the decisions that the AASB will make in regard to a Standard. The AASB would prefer that respondents supplement their opinions with detailed comments, whether supportive or otherwise, on the major issues. The AASB regards supportive and non-supportive comments as essential to a balanced review and will consider all submissions, whether they address some or all specific matters, additional issues or only one issue. The revised Conceptual Framework document is not a Standard and would not override specific Australian Accounting Standards. Hence, the proposed changes to the Conceptual Framework will not have an immediate effect on the Financial statements of most Reporting entities. However, entities could be affected by the changes if they use the Australian Conceptual Framework to develop or select accounting policies when no Standard specifically applies to a transaction.

8 exposure draft 265 Updating References to the Conceptual Framework has been issued in conjunction with this exposure draft to propose updated references in Standards to the revised Conceptual Framework . Due Date for Comments to the AASB. Comments should be submitted to the AASB by 5 October 2015. This will enable the AASB. to consider those comments in the process of formulating its own comments to the IASB. Constituents are also strongly encouraged to send their response to the IASB. AASB Specific Matters for Comment The AASB would particularly value comments on the following: 1. whether, and to what extent, the IPSASB Conceptual Framework should be incorporated into the AASB Conceptual Framework for Financial Reporting ;. 2. whether there are any regulatory issues or other issues arising in the Australian environment that may affect the implementation of the proposals, particularly any issues relating to: (a) not-for-profit entities; and (b) public sector entities, including GAAP/GFS implications.

9 3. whether, overall, the proposals would result in Financial statements that would be useful to users;. 4. whether the proposals are in the best interests of the Australian economy; and 5. unless already otherwise provided in your response, the costs and benefits of the proposals relative to the current requirements, whether quantitative ( Financial or non- Financial ) or qualitative. In relation to quantitative Financial costs, the AASB is particularly seeking to know the nature(s) and estimated amount(s) of any expected incremental costs, or cost savings, of the proposals relative to the existing requirements. ED 264 iv REQUEST FOR COMMENTS. Relationship to Other AASB Projects The AASB is currently undertaking a review of the Australian Reporting Framework . One of the objectives of the project is to clarify and simplify the Australian Financial Reporting Framework , to facilitate identifying which entities would be required to prepare general purpose Financial statements and the level of the applicable Reporting requirements, without individual entities having to apply the Reporting entity concept.

10 The proposals in this exposure draft with respect to the boundaries of a Reporting entity may have some interaction with this AASB project; however, the AASB project is not expected to affect the proposals as exposed herein. ED 264 v REQUEST FOR COMMENTS. May 2015. exposure draft ED/2015/3. Conceptual Framework for Financial Reporting Comments to be received by 26 October 2015. exposure draft Conceptual Framework for Financial Reporting Comments to be received by 26 October 2015. exposure draft ED/2015/3 Conceptual Framework for Financial Reporting is published by the International Accounting Standards Board (IASB) for comment only. The proposals may be modified in the light of the comments received before being issued in final form. Comments need to be received by 26 October 2015 and should be submitted in writing to the address below, by email to or electronically using our Comment on a proposal' page.