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FRC advises IASB on conceptual framework

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15th Jan 2014
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The Financial Reporting Council (FRC) has urged the International Accounting Standards Board (IASB) to re-introduce the concepts of prudence, stewardship and reliability to the principles underlying international accounting standards because they are “fundamental” to financial reporting. 

The FRC was responding to the IASB’s discussion paper on its conceptual framework, which outlines the concepts that underlie the preparation and presentation of financial statements. 

The paper identifies principles for the IASB to use when it develops and revises IFRSs.

Melanie McLaren, FRC executive director, codes and standards said the paper makes valuable and thoughtful suggestions.

"In particular we welcome the emphasis placed on the importance of the profit and loss account as well as the balance sheet, and the recognition that financial reporting should not be based entirely on market values.

"As future standards will be developed from the conceptual framework, it is essential that it is of the highest quality possible.  We hope that our suggestions will assist the IASB in achieving that.”

The FRC has also proposed that the IASB’s framework states that financial statements show the performance of an entity’s business model. 

“It is all too often said that directors cannot recognise their business from their financial statements

“Accounting standards should allow an appreciation of the results of the business model," McLaren said. 

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By yamamy
16th Jan 2014 11:02

There and back again!

When the economy was strong, being Prudent was seen to be reducing taxable profit,  Now that economic times have changed, Prudence is again more relevant!

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