Someone suggested to me once that conceptual frameworks are solely (or perhaps mainly) strategic tools that accounting standard setters use: I do not believe that is the main motivation for standard setters. It may well not be a motivation at all. Is there any alternative? It is not fruitful to discuss the purpose of a… Continue reading What is a Conceptual Framework for?
Category: Setting standards
The IASB’s first 25 years
The International Accounting Standards Board (IASB) started work 25 years ago this month (in April 2001). In this post, I highlight: Work plan The IASB’s work plan from 2001 to 2021 was dominated by the following main themes: I won’t try to summarise here the IASB’s projects (large and small) that don’t fit neatly into… Continue reading The IASB’s first 25 years
FX on eliminated intragroup balances
The IFRS Interpretations Committee issued in September 2025 a Tentative Agenda Decision Classification of a Foreign Exchange Difference from an Intragroup Monetary Liability (or Asset). The Tentative Agenda Decision is open for comment until 25 November 2025. It is available at IFRS – Tentative Agenda Decision and comment letters: Classification of a Foreign Exchange Difference… Continue reading FX on eliminated intragroup balances
Changing accounting policies: when retrospective is not best
Applying IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, changes in accounting policies are generally applied retrospectively—by restating information for prior years as if the new accounting policy had always been applied. That approach of (full) retrospective application is overridden: IAS 8 makes it look as though full retrospective application is the default… Continue reading Changing accounting policies: when retrospective is not best
Is there an even better way to write exposure drafts?
The IASB writes good exposure drafts, but I believe it is worth considering a different format, which I discuss below. Getting input from investors The IASB realised several years ago that it cannot expect many users of financial statements (investors) to read an entire exposure draft, understand everything in that ED and then send the… Continue reading Is there an even better way to write exposure drafts?
What is income?
Some people wonder whether the IASB’s Conceptual Framework defines ‘income’ in a useful way. This post explores 2 aspects of that issue: Many of the points discussed in this post relate just as much to expense as to income. To keep the discussion brief, I discuss only income. Is ‘income’ a debit or a credit?… Continue reading What is income?
Cash flow statements for banks, insurers and investment funds
People often argue that banks’ cash flow statements do not provide useful information. In this post, I explore whether a cash flow statement can provide useful information about most banks’ core operations: deposit-taking and lending. I discuss below: Basic example I will start with a simple example, example 1. On 2 January 20X1, bank A:… Continue reading Cash flow statements for banks, insurers and investment funds
Defining contingent liabilities
IAS 37 Provisions, Contingent Liabilities and Contingent Assets contains an unusual definition of contingent liabilities. The definition covers 3 different items that do not form a natural class, and it also differs from how people (other than people applying IAS 37) commonly think about contingent liabilities. This post explains how IAS 37 ended up having… Continue reading Defining contingent liabilities
Digital reporting needs context
People sometimes suggest that the need for financial statements is disappearing fast. They argue that advances in digital reporting enable investors to look directly for the information they need, without being constrained by the format of the financial statements. In my view, those suggestions couldn’t be more wrong. It is a great development that investors… Continue reading Digital reporting needs context
Numbering in IFRS Accounting Standards
When the IASB started off, it created a system for numbering the paragraphs in IFRS Accounting Standards and accompanying material. This post summarises: Original paragraph numbering system The IASB’s original paragraph numbering system in IFRS 1 First-Time Adoption of International Financial Reporting Standards used the following principles: The appendices to a Standard are part of… Continue reading Numbering in IFRS Accounting Standards