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5/28/2018 5. DeeganFAT3e_PPT_ch06.ppt
1/676-1Copyright 2009 McGraw-Hill Australia Pty LtdPPTs t/a Deegan, Financial Accounting Theory 3e
Financial Accounting TheoryCraig Deegan
Chapter 6
Normative theories of accountingthe case
of conceptual framework projects
Slides written by Craig Deegan
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6-2Copyright 2009 McGraw-Hill Australia Pty LtdPPTs t/a Deegan, Financial Accounting Theory 3e
Learning objectives
In this chapter you will be introduced to the role that conceptual frameworks (CFs) can play in the
practice of financial reporting
the history of the development of the various existing
conceptual framework projects
the various building blocks that have been developedwithin various conceptual framework projects
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6-3Copyright 2009 McGraw-Hill Australia Pty LtdPPTs t/a Deegan, Financial Accounting Theory 3e
Learning objectives (cont.)
perceived advantages and disadvantages that arise fromthe establishment and development of conceptual
frameworks
recent initiatives being undertaken by the IASB and the
FASB to develop an improved conceptual framework
factors, including political factors, that might help orhinder the development of conceptual framework projects
groups within society which are likely to benefit from the
establishment and development of conceptual framework
projects
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6-4Copyright 2009 McGraw-Hill Australia Pty LtdPPTs t/a Deegan, Financial Accounting Theory 3e
What is a conceptual framework?
A coherent system of interrelated objectives andfundamentals that is expected to lead to consistent
standards (Statement of Financial Accounting
Concepts No. 1: Objectives of Financial Reporting
by Business Enterprises 1978)
Attempts to provide a structured theory of
accounting
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6-5Copyright 2009 McGraw-Hill Australia Pty LtdPPTs t/a Deegan, Financial Accounting Theory 3e
Conceptual frameworks as normativetheories
Conceptual frameworks provide prescription sothey are considered normative theories of
accounting
Prescribes the nature, function and limits of
financial accounting and reporting (Statement of
Financial Accounting Concepts No. 1: Objectives
of Financial Reporting by Business Enterprises,
1978)
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6-6Copyright 2009 McGraw-Hill Australia Pty LtdPPTs t/a Deegan, Financial Accounting Theory 3e
A revised conceptual framework
in recent years the FASB and IASB have beenjointly working towards the development of an
improved conceptual framework
in 2008 they released a document entitled:
Exposure Draft of an improved Conceptual
Framework for Financial Reporting
this phase of the project specifically addressed the
objective of financial reporting and the qualitative
characteristics and constraints of decision-useful
financial reporting information.
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Rationale for conceptual frameworks
To develop the practice of financial reportinglogically and consistently we need to address such
issues as
what we mean by financial reporting and what should be
its scope
which organisational characteristics indicate that an entityshould produce financial reports
the objective of financial reporting
qualitative characteristics financial information should
possess
what are the elements of financial reporting
what measurement rule should be employed
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6-8Copyright 2009 McGraw-Hill Australia Pty LtdPPTs t/a Deegan, Financial Accounting Theory 3e
Rationale for conceptual frameworks(cont.)
Proponents argue that without agreement on theseissues accounting standards will be developed in
an ad hocmanner
Limited consistency between accounting standards
in the absence of a conceptual framework
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6-9Copyright 2009 McGraw-Hill Australia Pty LtdPPTs t/a Deegan, Financial Accounting Theory 3e
The building blocks of theconceptual framework
The framework must be developed in a particular order
some issues (or assumptions) need to be resolved or made beforemoving on to subsequent building blocks
One obvious issue that needs early agreement would be what is meantby financial reporting.
Other issues that would also need agreement early in the processwould be:
Definition of a reporting entity Definition of the users of financial statements
The objective of financial reporting
Because the rest of the framework flows from assumptions aboutthe objective, if we reject the assumption, then we personally mightbe prepared to reject the prescriptions provided by the framework
Refer to Figure 6.1 (p. 213) in the text for an overview of the IASBFramework for the Preparation and Presentation of FinancialStatements(which in 2005 replaced the Australian ConceptualFramework)
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6-10Copyright 2009 McGraw-Hill Australia Pty LtdPPTs t/a Deegan, Financial Accounting Theory 3e
History of the development of CFs
CFs were developed in a number of jurisdictionsincluding US, UK, Canada, Australia, New Zealand, International
Accounting Standards Committee
In recent years many countries have adopted the
IASB Framework given that they have decided toadopt the accounting standards released by theIASB
No standard-setters had developed a completeCF; measurement issues typically unaddressed
Limited or no progress in recent years, althoughthere is now a joint IASB/FASB project to developa new and improved conceptual framework
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Development of frameworks ofaccounting in the US
1961 and 1962: Moonitz, and Moonitz andSprouse prescribed that accounting practice
should be based on current values
1965: Grady developed theory based on
description of existing practice
led to the release of Accounting Principles Board (APB)
Statement No. 4
however, accounting profession under criticism for lack of
any real framework
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Development of frameworks ofaccounting in the US (cont.)
Led to formation of Trueblood Committee in 1971which produced Trueblood Report
report outlined 12 objectives of accounting and seven
qualitative characteristics which financial information
should possess
objective 1: focused on information needs of financialstatement users
objective 2: need to serve users with limited ability to
demand financial information
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Development of frameworks ofaccounting in the US (cont.)
1974: APB replaced by FASB which thenembarked on its CF project
Six Statements of Financial Accounting Concepts
(SFACs) released from 1978 to 1985
Initial SFACs normative in nature, but SFAC No. 5relating to recognition and measurement largely
descriptive of current practice
received much criticism
since 2005 FASB and IASB have been jointly working
towards the development of a revised conceptualframework that would be used by both boardsreferred
to as the convergence project
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Development of a CF in the UK
Early moves towards guidance relating toobjectives and identification of users provided by
The Corporate Report (1976)
concerned with addressing the rights of the community in
terms of their access to financial information (broader
than notion of users adopted in other frameworks) ultimately contents generally not accepted by the
accounting profession
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Development of a CF in the UK (cont.)
1991: ASB adopted the IASCs CF IASC framework was generally consistent with the
US and Australian frameworkssubsequently
became known as the IASB Framework
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Development of a CF in Australia
Degree of progression was slow Only four Statements of Accounting Concepts
(SACs) were released
SAC 1: Definition of the Reporting Entity
SAC 2: Objectives of General Purpose Financial
Reporting
SAC 3: Qualitative Characteristics of Financial
Information
SAC 4: Definition and Recognition of the Elements of
Financial Statements
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6-17Copyright 2009 McGraw-Hill Australia Pty LtdPPTs t/a Deegan, Financial Accounting Theory 3e
Development of a CF in Australia(cont.)
Fifth SAC relating to measurement was neverreleased
Had a number of similarities to the US CF project
2005: Australia adopted the IASB Framework as a
result of the decision by the Financial ReportingCouncil that Australia would adopt IAS/IFRS by
2005
SAC 3 and SAC 4 were abandoned
SAC 1 and SAC 2 were retained until such timethat a revised IASB Framework was developed
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Current efforts of the IASB and theFASB
From 2005 the IASB and the FASB have been jointly working
towards the development of a revised conceptual framework thatwill be used by both parties
The need for this revised framework has arisen because of theconvergence project in which the IASB and the FASB are workingtogether to converge their two sets of accounting standards
Will take several years to complete
The IASB and FASB are undertaking the work on the conceptualframework in eight phases, these being: Objectives and qualitative characteristics
Definitions of elements
recognition and de-recognition
Measurement
Reporting entity concept
Boundaries of financial reporting, and presentation and disclosure Purpose and status of the framework
Application of the framework to not-for-profit entities
Remaining Issues, if any
http://www.fasb.org/project/cf_phase-a.shtmlhttp://www.fasb.org/project/cf_phase-b.shtmlhttp://www.fasb.org/project/cf_phase-b.shtmlhttp://www.fasb.org/project/cf_phase-c.shtmlhttp://www.fasb.org/project/cf_phase-d.shtmlhttp://www.fasb.org/project/cf_phase-e.shtmlhttp://www.fasb.org/project/cf_phase-f.shtmlhttp://www.fasb.org/project/cf_phase-g.shtmlhttp://www.fasb.org/project/cf_phase-h.shtmlhttp://www.fasb.org/project/cf_phase-h.shtmlhttp://www.fasb.org/project/cf_phase-g.shtmlhttp://www.fasb.org/project/cf_phase-g.shtmlhttp://www.fasb.org/project/cf_phase-g.shtmlhttp://www.fasb.org/project/cf_phase-g.shtmlhttp://www.fasb.org/project/cf_phase-g.shtmlhttp://www.fasb.org/project/cf_phase-f.shtmlhttp://www.fasb.org/project/cf_phase-e.shtmlhttp://www.fasb.org/project/cf_phase-d.shtmlhttp://www.fasb.org/project/cf_phase-c.shtmlhttp://www.fasb.org/project/cf_phase-b.shtmlhttp://www.fasb.org/project/cf_phase-b.shtmlhttp://www.fasb.org/project/cf_phase-b.shtmlhttp://www.fasb.org/project/cf_phase-b.shtmlhttp://www.fasb.org/project/cf_phase-b.shtmlhttp://www.fasb.org/project/cf_phase-a.shtml -
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Building blocks of the CF
The following discussion is based on the IASB Framework
currently in place
Where appropriate, reference will also be made to current
work being done by IASB and FASB given that this gives an
indication of what might come in the future
Building blocks of the various CFs have addressed definition of the reporting entity
objectives of general purpose financial reporting (GPFR)
perceived users of GPFRs
qualitative characteristics that GPFRs should possess
elements of financial statements possible approaches to measuring the elements
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Definition of the reporting entity
The Conceptual Framework provides a definitionof entities required to produce GPFRs
known as reporting entities
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General purpose financial reports
GPFRs are defined as reports intended to meet the information needs common to
users who are unable to command the preparation of
reports tailored so as to satisfy, specifically, all of their
information needs (SAC 1, para. 6)
GPFRs are reports that comply with accountingstandards and other generally accepted
accounting practices (GAAPs)
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Special purpose financial reports
By contrast, special purpose reports are providedto meet the information demands of a particular
user, or group of users
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Entities required to produce GPFRs
Not all entities are classed as reporting entities SAC 1 states that GPFRs should be prepared
when there are users
whose information needs have common elements,
and those users cannot command the preparation of
information to satisfy their individual information needs(para. 8)
f
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Factors indicative of a reportingentity (SAC 1)
Separation of management from those with aneconomic interest in the entity
The economic or political importance/influence of
the entity to/on other parties
The financial characteristics of the entity
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Objectives of GPFR
Traditional objective was to enable outsiders toassess the stewardship of management
Recent commonly accepted goal of financial
reporting is to assist report users economic
decision making
less emphasis placed on the stewardship function
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Objective embraced within CFs
Objective of GPFRs in SAC 2 is deemed to be to provide information to users that is useful for makingand evaluating decisions about the allocation of scarce
resources
Objective of decision usefulness calls into question
usefulness of historical cost information
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Other objectives of GPFRs
Another objective is to enable reporting entities todemonstrate accountability between the entity and
those parties to which the entity is deemed
accountable
Accountability is defined as
the duty to provide an account or reckoning of those
actions for which one is held responsible
accountability is not generally embraced by CFs
C t thi ki f th IASB d
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Current thinking of the IASB andFASB
In the 2008 conceptual framework exposure draft it is stated:
The objective of general purpose financial reporting is to providefinancial information about the reporting entity that is useful topresent and potential equity investors, lenders and othercreditors in making decisions in their capacity as capitalproviders. Information that is decision-useful to capital providersmay also be useful to other users of financial reporting who are
not capital providers. As we know from previous lectures, before we are prepared
to accept the prescriptions provided by a normative theorywe must be satisfied with the underlying assumptions made
Hence, if we reject the assumptions about the objective ofgeneral purpose financial reporting then we would be inclinedto reject the prescriptions made despite how logical theframework may appear
Is this objective (above) too restrictive?
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Users of financial reports
SAC 2 identifies three primary user groups forGPFRs
resource providers
employees, lenders, creditors, suppliers, investors and
contributors
recipients of goods and services customers and beneficiaries
parties performing review or oversight function
parliaments, governments, regulatory agencies, analysts,
labour unions, employer groups, media and special interest
groups
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InternationalperspectivesonusersofGPFRs
The IASB Framework identifies GPFRs users as investors,employees,lenders,
suppliers, customers,govt.agencies and the public
states that information designed to meet the needs ofinvestors will usually meet the needs of the other groups
US: SFAC 1 main focus is present and potential investors and other
users with either a direct financial interest or related tothose with a direct financial interest
UK: The Corporate Report
all groups impacted by an organisations operations haverights to information about the reporting entity, notnecessarily related to resource allocation decisions
L l f ti t d f
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Level of expertise expected offinancial report readers
Generally accepted that readers are expected tohave some proficiency in financial accounting
IASB Framework (para. 25)
users are assumed to have a reasonable knowledge
of business and economic activities and accounting and a
willingness to study the information with reasonablediligence
C t thi ki f th IASB d th
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PPTs t/a Deegan, Financial Accounting Theory 3e
Current thinking of the IASB and theFASB in relation to users
The 2008 exposure draft stated: The primary user group includes both present andpotential equity investors, lenders and other creditors,
regardless of how they obtained, or will obtain, their
interests. Other users who have specialised needs,
such as suppliers, customers and employees (when not
acting as capital providers), as well as governments and
their agencies and members of the public, may also find
useful the information that meets the needs of capital
providers; however, financial reporting is not primarily
directed to these other groups because capital providers
have more direct and immediate needs
Is this perspective of users too restrictive?
Q lit ti h t i ti f
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Qualitative characteristics offinancial reports
To ensure financial information is useful foreconomic decision making, we need to consider
the attributes or qualities that financial information
should have
According to IASB Framework
primary qualitative characteristics are understandability,
relevance, reliability and comparability
related to relevance is materiality
IASB Framework appears to give greater prominence to
relevance and reliability there are issues associated with the trade-off between
relevance and reliability
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Reliability
Information is considered to be reliable if itfaithfully represents the entitys transactions and
events
Should be free from bias and undue error
Reliability is a function of representationalfaithfulness, verifiability and neutrality
Reliability implications for
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Reliabilityimplications fortraditional accounting
Traditionally, the doctrine of conservatism and theacceptance of prudence has been adopted
bias towards understating asset values and overstating
liabilities
This doctrine is not consistent with notions of
reliability or freedom from bias
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Relevance
Something is relevant if it influences decisions onthe allocation of scarce resources
if it is capable of making a difference in a decision
For information to be relevant it should have
predictive value, and
feedback value
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Materiality
A limiting factor on the disclosure of relevant andreliable material is the notion of materiality
An item is material if (IASB Framework, para. 30)
... its omission or misstatement could influence the
economic decisions of users taken on the basis of the
financial statements . Materiality provides a cut-offrather than being a primary qualitative characteristic
which information must have if it is to be useful
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Uniformity and consistency
Uniformity and consistency imply advantages in
restricting the number of accounting methods that
can be used by reporting entities
has been argued that firms adopt particular accounting
methods because they best reflect their underlying
performance restricting available methods imposes costs on reporting
entities
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Costs vs benefits
Need to consider whether the cost of providing
certain information exceeds the benefits to be
derived from its provision
costs include collection, storage, retrieval, presentation,
analysis and interpretation
benefits come from sound economic decision making byusers
Measuring potential costs and benefits involves
professional judgement
Latest thinking of the IASB and the FASB
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Latest thinking of the IASB and the FASBregarding qualitative characteristics
In the 2008 exposure draft released as part of the conceptual
framework project it is stated: For financial information to be useful, it must possess twofundamental qualitative characteristicsrelevance and faithfulrepresentation.
the draft conceptual framework has reduced the four 'primaryqualitative characteristics' to two 'fundamental qualitativecharacteristics'
the qualitative characteristic of reliability was replaced byfaithfully representation
The other two primary qualitative characteristics identified inthe IASB Framework, these being understandability andcomparability, have been renamed as enhancing qualitativecharacteristics' in the draft document released by the IASB
Two additional 'enhancing qualitative characteristics' havealso been included (thereby giving a total of four 'enhancingqualitative characteristics), these being verifiability andtimeliness
Can GPFRs provide unbiased
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Can GPFRs provide unbiasedaccounts of performance?
The practice of accounting is heavily reliant on
professional judgement
Prior to accounting standards being released,
standard setters attempt to determine the
economic consequences of following the
standards
if consider economic consequences then standards
cannot be considered objective or neutral
Can GPFRs provide unbiased
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Can GPFRs provide unbiasedaccounts of performance? (cont.)
If we accept the notion that preparers will be drivenby self-interest (from Positive Accounting Theory)notions of objectivity or neutrality are unrealistic
Political nature of standard setting process alsoaffects neutrality and objectivity
In communicating reality accountants constructreality (Hines 1988) That is, if accountants identify something and start to
place a monetary value on it then it gains importanceitbecomes visible (and real)
Conversely, if accountants ignore itsuch as manyexternalities caused by business entitiesthen for manypeople the issue does not exist
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The elements of financial reporting
The next building block considers the definition
and recognition criteria of the elements of financial
reporting
Definition criteriawhat attributes are required
before an item can be considered as belonging to
a particular class of element
Recognition criteriaemployed to determine
whether the item can be included in the financial
statements
Five elements of financial reporting
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Five elements of financial reportingin the IASB Framework
Assets
Liabilities
Equity
Expenses
Income in the IASB Framework, income is further subdivided into
revenues and gains
ten elements identified in the US by FASB
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Definition of assets
a resource controlled by the entity as a result of
past events and from which future economic
benefits are expected to flow to the entity (IASB
Framework, para. 49(a))
Three key characteristics
must be an expected future economic benefit
the reporting entity must control the future economic
benefit
the transaction or other past event giving rise to the
reporting entitys control must have occurred
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Definition of assets (cont.)
The definition refers to the benefit and not its
source
in the absence of future economic benefits, the object or
right will not qualify as an asset
The benefits can result from ongoing use, not
necessarily a value in exchange
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The characteristic of control
Control relates to the capacity to benefit from the
asset and to deny or regulate others access to the
benefit
Legal enforceability is not a prerequisite for
establishing the existence of control
control (and not legal ownership) is required, although
controlled assets are frequently owned
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Recognition of assets
An assetand all the other elements of
accountingshall be recognised when
it is probable that any future economic benefit associated
with the item will flow to or from the entity, and
the item has a cost or value that can be measured with
reliability (IASB Framework, para. 83) Probable is generally considered to mean more
likely rather than less likely
Current thinking of the IASB and
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Current thinking of the IASB andFASB in relation to assets
Within the 2008 exposure draft the IASB and FASB thought
there were shortcomings with the existing asset definition.They stated: Some users misinterpret the terms expected (IASB definition)
and probable (FASB definition) to mean that there must be ahigh likelihood of future economic benefits for the definition tobe met; this excludes asset items with a low likelihood of futureeconomic benefits.
The definitions place too much emphasis on identifying thefuture flow of economic benefits, instead of focusing on the itemthat presently exists, an economic resource.
Some users misinterpret the term control and use it in thesame sense as that used for purposes of consolidationaccounting. The term should focus on whether the entity hassome rights or privileged access to the economic resource.
The definitions place undue emphasis on identifying the pasttransactions or events that gave rise to the asset, instead offocusing on whether the entity had access to the economicresource at the balance sheet date.
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Current thinking about assets (cont.)
The IASB and FASB developed the following draft
definition:
An asset of an entity is a present economic resource to
which, through an enforceable right or other means, the
entity has access or can limit the access of others
This definition also seems to have limitations Some of the above terms seem rather ambiguous
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Definition of liabilities
A liability is presently defined as
a present obligation of the entity arising from past
events, the settlement of which is expected to result in an
outflow from the entity of resources embodying economic
benefits (IASB Framework, para. 49(b))
present obligations not only refers to legally enforceableobligations but also those imposed by notions of equity
and fairness, or by custom or other business practices
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Recognition of liabilities
Recognition criteria consistent with those of assets
and the other elements of accounting
A liability shall be recognised when
it is probable that the sacrifice of economic benefits will
be required, and
the amount of the liability can be measured reliably
Has implications for disclosure of various
provisions
Present thinking of the IASB and
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Present thinking of the IASB andFASB in relation to liabilities
According to the exposure draft released in 2008 the IASB
and FASB believe that the existing liability definition haslimitations:
Some users misinterpret the terms expected (IASB definition)
and probable (FASB definition) to mean that there must be a
high likelihood of future outflow of economic benefits for the
definition to be met; this excludes liability items with a lowlikelihood of a future outflow of economic benefits.
The definitions place too much emphasis on identifying the
future outflow of economic benefits, instead of focusing on the
item that presently exists, an economic obligation.
The definitions place undue emphasis on identifying the past
transactions or events that gave rise to the liability, instead of
focusing on whether the entity has an economic obligation at
the reporting date.
Present thinking of the IASB and
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Present thinking of the IASB andFASB in relation to liabilities (cont.)
The IASB and FASB proposed the following draftdefinition of a liability: A liability of an entity is a present economic obligation
that is enforceable against the entity.
as with the proposed definition of assets, thesuggested change in the liability definition couldpotentially have significant implications for financialreporting. For example: the above definition could act to exclude constructive or
equitable obligations that are not enforceable against theentity. This would be a major departure from existing
practice.
Would this be a good change?
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Approaches to determining profit
Two common approaches to determining profits
asset/liability approach links profit to changes in assets
and liabilities
revenue/expense approach relies on concepts such as
the matching principle
The definition of expenses and revenues in the CFbased on asset/liability perspective
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Definition of expenses
decreases in economic benefits during the
accounting period in the form of outflows or
depletions of assets or incurrences of liabilities that
result in decreases in equity, other than those
relating to distributions to equity participants (IASB
Framework, para. 70(b))
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Recognition of expenses
An expense shall be recognised when
it is probable that the consumption or loss of future
economic benefits resulting in a reduction in assets
and/or an increase in liabilities has occurred, and
the consumption or loss of economic benefits can be
measured reliably
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Definition of income
increases in economic benefits during the
accounting period in the form of inflows or
enhancements of assets or decreases of liabilities
that result in increases in equity, other than those
relating to contributions from equity participants
(SAC 4, para. 70(a))
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Definition of income (cont.)
Income can be recognised from normal trading
relations, as well as from non-reciprocal transferssuch as grants, donations, bequests or whereliabilities are forgiven
IASB Framework further subdivides income into
revenues and gains revenue arises in the course of the ordinary activities ofan entity
gains represent other items that meet the definition ofincome and may, or may not, arise in the ordinaryactivities of an enterprise
not clear why there is a need to break income into twocomponents
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Recognition of income
As with the other elements of accounting, income
is recognised when
it is probable that the inflow or other enhancement or
saving in outflows of future economic benefits has
occurred, and
the inflow or other enhancement or saving in outflows offuture economic benefits can be measured reliably
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Definition of equity
Equity is defined as the residual interest in the
assets of the entity after deducting all of its
liabilities (IASB Framework, para. 49(c))
As a residual interest it ranks after liabilities in
terms of claims against the assets
Definition is a direct function of the definitions of
assets and liabilities
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Measurement principles
To date very little prescription in relation to
measurement provided by CFs
FASB statement provides description of various
approaches to measuring elements without
providing prescription
Current IASB and FASB work on measurementissues
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issues In 2005 the IASB and FASB stated:
Measurement is one of the most underdeveloped areas of the twoframeworks . . . Both frameworks (the IASB and FASB Frameworks)
contain lists of measurement attributes used in practice. The lists arebroadly consistent, comprising historical cost, current cost, gross ornet realizable (settlement) value, current market value, and presentvalue of expected future cash flows. Both frameworks indicate thatuse of different measurement attributes is expected to continue.However, neither provides guidance on how to choose between thelisted measurement attributes or consider other theoreticalpossibilities. In other words, the frameworks lack fully developedmeasurement concepts.
Phase C of the joint IASB and FASB Conceptual FrameworkProject is to address measurement issues. In this work the IASBand FASB have identified nine potential measurement bases,these being:past entry price,past exit price, modified pastamount, current entry price, current exit price, current equilibrium
price, value in use, future entry price, and future exit price. It is expected that it will be a number of years before any
conclusion is reached about the most appropriate measurementbasis for assets and liabilities.
Benefits associated with conceptual
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pframeworks
Accounting standards should be more consistent
and logical
Increased international compatibility of accounting
standards
Standard-setters should be more accountable for
their decisions
Communication between standard-setters and
their constituents should be enhanced
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Benefits associated with CFs (cont.)
The development of accounting standards should
be more economical
Where conceptual frameworks cover a particular
issue, there might be a reduced need for additional
standards
Emphasise the decision usefulness role of
financial reports rather than restricting concern to
stewardship
Disadvantages of conceptual
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g pframeworks
Smaller organisations may feel overburdened by
reporting requirements
Typically economic in focus so ignore transactions
that have not involved market transactions or
exchange of property rights
further reinforces the importance of economic
performance relative to social performance
Represent a codification of existing practice
CFs as a means of legitimising
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g gstandard-setting bodies
Some (e.g. Hines and Solomons) have suggested
that CFs have been used as devices to help
ensure the ongoing existence of the accounting
profession
Increase the ability of the profession to self-
regulate, thus counteracting governmentintervention