The IASB issued the revised Conceptual Framework for Financial Reporting in March 2018. It includes comprehensive changes to the previous edition.
The revised Conceptual Framework includes comprehensive changes to the previous Conceptual Framework, issued in 1989 and partly revised in 2010. The previous Conceptual Framework (the 2010 Conceptual Framework) was criticised for its lack of clarity, the exclusion of certain important concepts and for being outdated in terms of the IASB’s current thinking. Following the IASB’s agenda consultation in 2011, the Conceptual Framework project was added to the IASB’s work plan in September 2012. Since then, the IASB has issued a discussion paper in July 2013 and an exposure draft in June 2015.
In revising the Conceptual Framework, the Board was looking to underpin high level concepts with sufficient detail for it to set standards and to help others to better understand and interpret the standards.
The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. It is arranged in eight chapters, as follows:
- Chapter 1 – The objective of financial reporting
- Chapter 2 – Qualitative characteristics of useful financial information
- Chapter 3 – Financial statements and the reporting entity
- Chapter 4 – The elements of financial statements
- Chapter 5 – Recognition and derecognition
- Chapter 6 – Measurement
- Chapter 7 – Presentation and disclosure
- Chapter 8 – Concepts of capital and capital maintenance
The revised Conceptual Framework is accompanied by a Basis for Conclusions. The Board has also issued a separate accompanying document, Amendments to References to the Conceptual Framework in IFRS Standards, which sets out the amendments to affected standards in order to update references to the revised Conceptual Framework. In most cases, the standard references are updated to refer to the revised Conceptual Framework. However, there are two exemptions, one for IFRS 3 Business Combinations and one for those applying IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors in developing accounting policies for regulatory account balances.