Why no single use of the IASB’s Conceptual Framework is primary

The IASB overhauled its Conceptual Framework for Financial Reporting in a project carried out between 2012 and 2018. One topic the IASB addressed in a Discussion Paper in 2013 was the purpose of the Conceptual Framework. The IASB expressed a preliminary view that it should single out one use of the Conceptual Framework as its… Continue reading Why no single use of the IASB’s Conceptual Framework is primary

Own credit risk

The topic of own credit risk generates perhaps more strongly held views than any other accounting topic. For example, in around 2011, the IASB was developing a discussion paper on insurance contracts. Some of us visited one of the largest insurers in the world. They knew almost nothing about the project. But they had heard… Continue reading Own credit risk

Help for unpacking the objective of financial reporting

Paragraphs 1.2-1.4 of the IASB’s Conceptual Framework for Financial Reporting are written so densely that some people do not succeed in unpacking what they say. To make unpacking the meaning of those paragraphs easier, the IASB staff recommended in 2017 that the IASB should add a flowchart to the Conceptual Framework. This post summarises the… Continue reading Help for unpacking the objective of financial reporting

Discount rates for very long maturities

A common question about discount rates is how to estimate a discount rate for assets and liabilities with very long maturities. Such a discount rate contains a term premium that cannot be based on evidence and can never be back-tested. As a result, that term premium is not really an estimate, it is just a… Continue reading Discount rates for very long maturities

Measurements based on future cash flows

Paragraph 6.93 of the Conceptual Framework contains a brief high-level discussion of three different central estimates of a set of estimated future cash flows: the expected value (statistical mean) the maximum amount that is more likely than not to occur (similar to statistical median) the most likely outcome (statistical mode) Papers considered by the International… Continue reading Measurements based on future cash flows