征求意見稿164的全面回應(yīng)-A Comprehensive Response to the Exposure Draft 164
04-24, 2014
征求意見稿164的全面回應(yīng)-A Comprehensive Response to the Exposure Draft 164
1.1 What this Paper about and Why this Paper was Conducted 這是關(guān)于什么的dissertation和為什么要進(jìn)行這個dissertation
In order to evaluate the applicability of the concepts proposed in the first Exposure Draft in the International Accounting Standards Board (IASB)/ Financial Accounting Standards Board (FASB) Conceptual Framework Project on The Objective of Financial Reporting and the Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information (referred to the “Exposure Draft” in the next sections) as well as comment on its impacts in the public sectors, this report has been proposed by our group members in response to the comments requirement set by the Australian Accounting Standards Board (AASB).
為了評估在國際會計準(zhǔn)則理事會（IASB）的財務(wù)報告和定性特征和決策的約束的目的，/財務(wù)會計準(zhǔn)則委員會（FASB）的概念框架項(xiàng)目的第一個征求意見稿提出的概念的適用性（簡稱在下節(jié)中的“征求意見稿”），以及其在公共部門的影響評價，該報告已要求由澳大利亞會計準(zhǔn)則設(shè)置提出了我們的小組成員委員會的回應(yīng)評論（AASB）。
This is a report raised for identifying the differences between the Exposure Draft and the existing Conceptual Framework, evaluating whether those proposed changes will positively influence the practice of accounting and finally exploring some areas that may also bring in benefits if the Exposure Draft has proposed them. Our group prepared this report as to highlight some of the significant issues arising from the Exposure Draft.
這是提高識別征求意見稿和現(xiàn)有的概念框架之間的差異，評估是否這些擬議的改革將產(chǎn)生積極的影響，如果征求意見稿提出了他們的報告，會計實(shí)務(wù)探索一些地區(qū)可能會帶來的好處。我們的團(tuán)隊(duì)準(zhǔn)備這份報告強(qiáng)調(diào)一些從征求意見稿所帶來的顯著問題。
1.2 Summary & Structure of this Report
Generally, this report will focus on some areas extend beyond what is published in the Exposure Draft, as the result of searching for some areas included in the Conceptual Framework that need to be concentrated on or wait for further advancement.
Chapter One has posed the main concepts of this report as well as illustrated the purpose of our preparation. Additionally, in this part, the overall structure of this paper is proposed to provide readers a clear guideline to grasp the most significant issues raised in the report.
In Chapter Two, by demonstrating both the existing Conceptual Framework and the Exposure Draft’s main proposals, it can lead to the conclusions of differences between these two projects, which were both issued by the IASB and FASB as joint projects that cover private sector businesses only. In a word, in this chapter, the unique concepts and issues proposed in the Exposure Draft will be examined based on the publication edition.#p#分頁標(biāo)題#e#
Following that, Chapter Three is comprised by a number of paragraphs to observe the potential benefits and positive influences on the practice of accounting carried by the proposed Exposure Draft. Admittedly, the discussion will extend beyond the concepts published in the pages viii and ix of the Exposure Draft, while follow on the suggestions noted at points (a), (b) and (c) on page 5 of ED 164.
Although this is a well-prepared new Conceptual Framework, which will contribute to both IASB and FASB’s approaches to an effective international accounting standards, our group still recommend on some not amended areas that may bring in potential advantages for the public sectors if they are taken into consideration for improvement. All in all, Chapter Four will mainly focus on providing some suggestions for the Exposure Draft’s further development.
In the final Chapter, there is a brief conclusion of this paper, including a repetition of significant issues published in the Exposure Draft, an evaluation of potential contributions to the practice of accounting made by the proposed Conceptual Framework, as well as a recommendation on how to achieve further advancement.
Chapter Two Major Issues of the Exposure Draft 第二章 征求意見稿的主要問題
Generally, the Australian Accounting Standards Board (AASB) incorporated International Financial Reporting Standards (IFRSs), as issued by the IASB to prepare some financial statements in the Australian environment. Among the requirements included in the framework of AASB, some might be located in Australian Accounting Standards that were restricted to the non-for-profit or public sectors that addressed domestic, regulatory or other issues. Its framework for the preparation and presentation of financial statements is concerned about a wide range of issues, from first-time adoption of Australian equivalents to international financial reporting standards to agriculture (CPA Australia, 1997-2008). This seems that various kinds of accounting issues were published to be applied by CPA Australian members’ groups.
2.1 AASB Framework for the Preparation and Presentation of Financial Statements
The Australian conceptual framework comprises of the Framework, SAC 1 Definition of the Reporting Entity and SAC 2 Objective of General Purpose Financial Reporting, which are adopted from the IASB’s Framework for the preparation and presentation of financial statements.
2.1.1 Purpose
This AASB’s existing conceptual Framework sets out the concepts that underlie the preparation and presentation of financial reports for external users. It is not an Australian Accounting Standard and does not define standards for measurement or disclosure issues. Due to some potential conflicts between the Framework and an Australian Accounting Standard may occur, the requirements of the Standard shall prevail. Additionally, the standard-setters will be guided by the Framework in the development of future standards and in the review of existing standards. All in all, the major purpose of this Framework is to provide guidelines for Australian Accounting Standards-setters for creating and developing some future standards.#p#分頁標(biāo)題#e#
2.1.2 Scope
With regard to the scope of this Framework, it deals with the objective of financial reports; the qualitative characteristics that determine the usefulness of information in financial reports; the definition, recognition and measurement of the elements from which financial statements are constructed; and concepts of capital and capital maintenance (CPA Australia, 1997-2008). Especially, the Framework is concerned with general purpose financial reports expect some special purpose financial reports.
2.1.3 Appliers of Financial Reports
The users of financial reports include present and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies and the public (CPA Australia, 1997-2008).
2.1.4 The Objective of Financial Reports
The major purpose of the existence of financial reports is to satisfy most users’ needs of receiving information about the financial position, financial performance and cash flows of an entity that is helpful to a great number of users in making economic decision.
2.1.5 Qualitative Characteristics of Financial Reports
According to CPA Australia (1997-2008), there are four principal qualitative features of financial reports that include: understandability; relevance; reliability and comparability. Also, some other kinds of factors can be regarded as the qualitative characteristics of financial reports that are uniquely considered, such as materiality, neutrality, prudence, completeness and comparability. Among these characteristics, each one is not exclusive from the other. For instance, materiality is a subset of relevance.
2.1.6 Constraints on Information
Increasingly however, some competing forces will affect the quality of the financial information, like timeliness; balance between benefit and cost, and between qualitative characteristics.
2.2 Australian Accounting Standards Amended
In May 2008, the Australian Accounting Standards Board (AASB) has issued two new amending standards. These two new things affected 27 existing standards as a result of the International Accounting Standards Board's (IASB's) improvements to IFRSs (CPA Australia, 1997-2008). Other than these two new amended standards, AASB will frequently implement the annual improvements project that results in accounting changes for presentation, recognition or measurement purposes. The research objective of this paper is one of the amended standards – Exposure Drafts “An improved Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information” that needs to be commented as to achieve a most effective result on the practice of accounting in Australia.#p#分頁標(biāo)題#e#
2.3 Exposure Drafts
This new exposure draft was also published in May 2008 on the basis of two significant aspects of current Conceptual Framework for Financial Reports: the objective and the qualitative characteristics and constraints of financial reporting information. It is one part of IASB and FASB’s one joint project as to create a common framework that will replace the current frameworks of these two boards.
2.3.1 Reasons for Issue
As an essential part of the due process that AASB follows, an exposure draft published to seek public comments on amendments to the existing Australian Accounting Standard. Apart from this, the exposure draft is published as an assistant of AASB in formulating its response to the IASB and deciding how to incorporate the proposed concepts into the AASB Framework.
Moreover, the proposals in the exposure draft included in the IASB’s revised Framework would positively influence the future direction of Australian financial reports. It is also expected that this new amendment will be applicable to non-for-profit entities in the private sector and business entities in the public sector as well as capital providers (refer to paragraph 9 of the Preface to the Exposure Draft). This can be considered as a great contribution of this accounting issue.
2.3.2 Main Unique Features/Differences from the Existing Framework
As mentioned above, this new exposure draft was set by the International Accounting Standards Board and Financial Accounting Standards Board as to develop a common and improved Conceptual Framework for Financial Reports. It follows the publication of one Exposure Draft (ED) in 2006 of a Discussion Paper on the topics that addressed in that ED. At that time, according to the responses received by the Boards due to the Discussion Paper, this ED has been planned to set with considerations of those comments.
2.3.2.1 The Objective of Financial Reporting
As stated in the Exposure draft, the objective of financial reports is as follows:
The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders and other creditors in making decisions in their capacity as capital providers.
This seems that the objective of financial reporting must be appropriate to the contexts in which it applies.
2.3.2.1.1 Applicability to Not-For-Profit Entities
Based on some previous Exposure Drafts, the Boards (IASB and FASB) have concluded that the objective of financial reporting should be broad enough to encompass all of the determinations that included resource allocation decisions as well as subsequent decisions. In consequence, the Boards have increasingly emphasized on the accountability or stewardship aspect of financial reporting within the context of a decision-usefulness objective. In our group’s opinion, for non-for-profit entities, it is more crucial to take the discharge of accountability into consideration. This is one of the major focuses of ED 164.#p#分頁標(biāo)題#e#
Due to the importance of discharge of accountability of non-for-profit entities, the Exposure Draft has included countries participated in the monitoring group of Conceptual Framework to promote stewardship explicitly within the objective of financial reporting as well as stay as a separate additional objective or by inclusion within a single objective that is broader than the decision making.
2.3.2.1.2 Capital Providers Considered being the Primary User
Capital providers were identified by the Exposure Draft as having the most significant need for general purpose financial information about the economic resources of an entity. The Exposure Draft also stated that all the information that might be useful for capital providers should be initially valuable and available for other kinds of users of financial reports. In a word, the Exposure Draft regards the capital providers who may offer resources for organizations as the primary users of financial reporting and should be taken the most care of.
2.3.2.1.3 Emphasis on Cash Flows
As mentioned in the objective of financial reports of Exposure Draft, “a(n) entity’s capital providers are directly interested in the amount, timing and uncertainty of cash flows from dividends, interest, and the sale, redemption, or maturity of securities or loans.” This implies that a concentration on the ability to assess cash flow prospects is crucial especially for non-for-profit entities.
2.3.2.1.4 Scope of Financial Reporting
The objective of financial reports posted in the Exposure Draft pertains to all of financial reporting, not just the financial statements. In the part of Basis for Conclusions on the Exposure Draft, budgets are stated as such important in the non-for-profit sectors; as a result of this entities are funded by a formulation of budgets.
2.3.2.2 Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information
Generally, the Exposure Draft has proposed two fundamental qualitative characteristics of decision-useful information. They are relevance and faithful representation. In addition, four enhancing characteristics have been presented: comparability, verifiability, timeliness as well as understandability. With regard to the constraints, materiality and cost are two major factors.
Some enhancing characteristics included in Exposure Draft 164 are complementary to the fundamental qualitative characteristics. More useful information can be distinguished from some less useful ones. More specifically, comparability enables the appliers to find out the similarities and differences between two different economic issues as to choose the most useful information which should be used appropriately. Verifiability may be direct or indirect as a quality of information that stays for searching for a suitable measurement method without material errors. With respect to the other two enhancing features, timeliness means having information available to decision makers before it becomes incapacity to influence decisions. Finally, according to the concept of understandability, it can be enhanced by classifying and presenting information much more clearly and concisely. All in all, the Exposure Draft was subject to illustrate some qualitative characteristics particularly for non-for-profit entities.#p#分頁標(biāo)題#e#
In the Basis of Conclusions for Chapter 1 of the Exposure Draft, it is suggested that cost constraints may lead to the requirements of differences in financial reporting by standard-setters in some types of entities.
Chapter Three Evaluation of the Exposure Draft 第三章 評估的征求意見稿
3.1 The Objective of Financial Reporting
As stated in the Exposure Draft, the objective of financial reporting is the foundation of the Framework. Each aspect included in the Project is followed the objective and ensure that the financial reports will achieve the initial objective (refer to paragraph OB1 of the Exposure Draft). This seems that it is necessary for the objective of financial reporting to be appropriate to the contexts which it is used in. The objective of financial reports presented in the Exposure Draft is as follows (refer to paragraph OB2 of the Exposure Draft):
The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions in their capacity as capital providers. Information that is decision-useful to capital providers may also be useful to other users of financial reporting who are not capital providers.
Furthermore, three significant issues were raised in the part of Objective of Financial Reporting of the Exposure Draft (Chapter 1): the emphasis on accountability or stewardship; the users should be broaden as well as identify a primary user group; and the importance of cash flows. Especially, those issues were stressed in the not-for-profit sectors.
3.1.1 Three Issues Raised in Chapter 1 of the Exposure Draft
3.1.1.1 Emphasis on Accountability
According to the Basis of Conclusions in the Exposure Draft (refer to paragraphs BC 1.24 to BC 1.29 of the Exposure Draft), there are various opinions on whether the assessment of management’s accountability should be provided for useful information as a proposed objective of financial reporting. In particular, the Boards (AASB, IASB and FASB) have considered that the objective of financial reporting should include a wide range of information about all the decisions made by capital providers, such as resource allocation decisions and subsequent decisions made to enhance the capital providers’ investment.
However, in our group’s views, due to the more emphasis on capital providers’ accountability by the Exposure Draft, the stewardship in the case of not-for-profit entities should also be taken into consideration. According to CPA Australia (1997-2008), in the not-for-profit contexts, there are some situations where the discharge of accountability is crucial but not within the decision-useful objective; thus it is suggested by our group that there may be some considerations for the Boards to add the stewardship as a separate objective in the wide scope of financial businesses.#p#分頁標(biāo)題#e#
It can be summarized that in this issue, the Exposure Draft has raised an objective especially for capital providers that may create more positive influences on the economic development; nevertheless, in the situations of not-for-profit entities, it is also essential to set a clear objective on the discharge of accountability for this groups. This can be approached either for adding an additional objective in the financial reporting on decision-useful information or broadening the notion of existing decisions that include in the financial reporting.
3.1.1.2 Broaden the Users of Decision-useful Financial Reporting Information
The Exposure Draft particularly identifies capital providers as having the most significant need for general information about resources of an entity. As described in the AASB’s website, capital providers include equity investors, lenders, and other creditors. Admittedly, the information identified in the Objective of Financial Reports for capital providers will also be useful and helpful for some other users of financial reporting (refer to paragraph OB2 of the Exposure Draft). Thus, it is a good approach to concisely clarify the general information for capital providers in the Exposure Draft.
Not-for-profit entities, as another important group emerges in the financial reporting, comprise a wide range of users who can also do contributions to provide resources for organizations. This kind of users group is described as present and potential financial supporters by AASB. The consideration of this group people may focus more on the information and resources required for the future and for the stewardship of management of those resources needed.
Even though the capital providers should be regarded as a primary user group in the Exposure Draft, it is essential to take care of other categories of appliers for non-for-profit entities. In consequence, we highly recommend the Boards to broaden the scope of primary users besides capital providers. If so, this Exposure Draft can be applied in a wider range of financial businesses, and stand for international scope to offer an effective and informative guideline for standard-setters. Also, by broadening the scope of primary users into the non-for-profit areas, the standards made by other fellow institutions can be advanced due to their wider application in domestic or global accounting areas.
3.1.1.3 The Importance of Cash Flows
Cash flows, as one of the most significant items in the accounting field, should be stressed. In the statement of the Exposure Draft (refer to paragraph OB10 of the Exposure Draft) “An entity’s capital providers are directly interested in the amount, timing and uncertainty of cash flows from dividends, interest, and the sale, redemption, or maturity of securities or loans”, it can be clearly seen that cash flows has been considered as a highlight in the discussion of the Objective of Financial Reporting. This concentration on the ability of assessing cash flow prospects is necessary for the Boards, as the result of guaranteeing enough capital that could be used.#p#分頁標(biāo)題#e#
The suggestions posed by our group are to regard other things as more important. For instance, in the contexts of not-for-profit entities, other than the capital or cash flows, some other aspects such as the ability of delivery and cost effectiveness of goods and services, as well as the outcomes of those activities need to be highly focused.
3.1.2 Other Responses to the Objective of Financial Reporting
Apart from the above issues mentioned in the Exposure Draft, some other areas of changes should also be evaluated and responded. Firstly, the scope of Objective is concerned with all financial reporting, not just the financial statements. It is widely useful for most accounting entities in financial businesses. If the Objective of Financial Reporting can raise more information for non-for-profit entities, especially information about service performance, it can be improved to achieve the objective in a wider scope of financial reporting.
Moreover, the Basis for Conclusions in the Exposure Draft also illustrates the issue of whether the financial reporting should add information of forecasts and in which ways the information can be offered and collected. By achieving this, a formal published budget should be noted in order to support the operations of many not-for-profit entities, because most of the entities are funded on the basis of a formal budget.
3.2 Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information
As observed above, the Exposure Draft has proposed two fundamental as well as four enhancing qualitative characteristics of decision-useful information; along with stated two major constraints that may limit the information offered by the financial reporting.
Generally, the statements include in the qualitative characteristics proposed by the Exposure Draft are appropriate for non-for-profit entities. However, the application should be specifically described for which kinds of non-for-profit entities can use the information and how the information relevant to the identified users. As a result, our group has prepared some suggestions on this point of statement:
3.2.1 Fundamental Qualitative Characteristics
3.2.1.1 Relevance
In order to be useful for decision making, accounting information should be relevant and reliable. In the non-for-profit entities, it is more expected to evaluate the future outcomes; then the “relevance” of accounting information will illustrate the ability of reported productivity of an organization to predict its future performance. Certainly, the relevant information for identified users in the non-for-profit entities needs to be pointed out and stressed.
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3.2.1.2 Faithful Representation
Representational faithfulness (refer to paragraph QC2 of the Exposure Draft) means agreement between a measure and a real-world phenomenon that the measure is supposed to represent. For non-for-profit entities, some of their measures should be in response to the external contexts. For instance, if the term “regulations” of a governance company is understood by external followers, it is highly achieved for representational faithfulness; while if the “regulation” includes some items that cannot be widely accepted, then it lacks representational faithfulness.
3.2.2 Enhancing Qualitative Characteristics
3.2.2.1 Comparability
It is the quality of information that enables users to identify the similarities and differences between different economic phenomenons. Comparability is not a quality of an individual item of information, but a quality of the relationship of two items of information. Between the capital providers and not-for-profit entities, comparability should be noted by maximizing the fundamental qualitative characteristics such as the enhancement of a faithful representation of a relevant economic phenomenon for both two entities. Additionally, the accounting alternatives may be limited for the same economic phenomenon as not to diminish comparability.
3.2.2.2 Verifiability
The term “verifiability” refers to the quality of information that enables users to faithfully represent the economic phenomenon that it proposes to represent. It has been founded that different users included in the not-for-profit entities may present different views and requirements on resources and accounting information. Verifiability can be a better approach to make independent appliers to reach general consensus. This implies that it is important for the Exposure Draft to identify specific methods to achieve the “verifiability” either between not-for-profit entities and capital providers or among different users included in each user group respectively.
3.2.2.3 Timeliness
Information is timely if it is available to users before a determination is made. As one of the important component of relevance, timeliness is essential for users early enough to allow its application in the decision-making process. Our group has proposed to recommend the Exposure Draft to include some measurements for some companies to provide information timely to external users especially for not-for-profit group users on a periodic basis. For example, users may be required to assess trends in various items of financial reporting information in making credit decision.
3.2.2.4 Understandability
This requires the users either in capital providers’ user group or non-for-profit entities user group to understand the information within the context of decision-useful information making process (refer to paragraph QC15 of the Exposure Draft). By identifying their understanding of the financial information published in the Conceptual Framework, different users can be able to differ themselves from the others in their ability to comprehend any items of information.#p#分頁標(biāo)題#e#
3.2.3
Constraints
Although accounting theory is based on certain assumptions and the application of basic principles, there are exceptions to these assumptions and principles (FASB’s Conceptual Framework). These exceptions are called constraints, which sometimes justify departures from basic accounting theory. Generally, in the Exposure Draft, the constraints that limit the information provided by financial reporting is different from the existing Conceptual Framework, which include two aspects “materiality” and “cost”.
3.2.3.1 Materiality
With regard to the term “materiality”, there is a significant requirement of accountants’ ability to judge or apply professional expertise to decide when an amount is material in relation to other amounts. As posed by the Exposure Draft, this term was proposed to be one of the pervasive constraints for decision-useful financial information; this means the potential users should focus more on determining what should be examined during the testing process, rather than emphasizing so much on timeliness of the information’s relevance according to the existing Framework. It can be also considered that the Exposure Draft is more relevant and reliable in today’s accounting contexts that are essential for users to recognize. It is highly suggested by our group that materiality must be viewed in an individual entity’s own circumstances.
3.2.3.2 Cost
Sometimes, the costs of providing accounting information are difficult to measure; also, the great amount of costs may not used for providing information or some other profitable activities, but for assuming away from a problem (refer to paragraph QC27 of the Exposure Draft). As discussed in our group, there is a consensus opinion that cost considerations must be taken on board when designing new standards. For developing accounting standards in the future, a more rigorous analysis should be undertaken as to achieve a higher level of standards quality.
3.3 Broaden Users in the Public Sector
As mentioned in Chapter Two of this paper, some concerns raised in relation to the Objective of Financial Reporting such as the capability of relevant information that enables users to make a different decision compared to other capital providers, may need to be expressed in the context of a broader objective of financial reports for not-for-profit entities.
Those concerns raised in Chapter 1 of the Exposure Draft are also in considerations made by the Chapter 2 of the Exposure Draft. In Chapter 1 “The Objective of Financial Reporting”, the objectives of financial reporting mentioned are more appropriate for private sector businesses rather than for some public sector entities. Chapter 2 “Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information” is also more concerned about the capital providers. Although all of the financial information arising from both of the Chapter can be available in a wide range of private sectors or some areas of public sectors, it will be more reliable and available if the objectives of financial reporting and the material in the context of the constraints on the qualitative characteristics can be described differently for non-for-profit entities. For instance, in the New Zealand Framework, it is explained that decision-useful financial information should be provided where it can influence the decision-making and evaluations of users about the allocation of resources and stewardship of resources and the performance of the entity established on the basis of the financial statements.#p#分頁標(biāo)題#e#
3.4 Other Two Issues Arising from Chapter Two of the Exposure Draft
3.4.1 The Scope Consideration
According to our group’s recommendation of the Objective of Financial Reporting, the consideration of scope of financial reporting should be taken care of by the Boards (AASB, IASB and FASB). Similarly, not only the scope of financial reporting needs to be clarified appropriately, but also for necessitate reconsideration of the qualitative characteristics is required to all the types of information that may be already included within the scope of financial reporting.
3.4.2 The Constraint of Costs
In the paragraphs from QC29 to QC31 of the Exposure Draft, there is a discussion of the pervasive constraint of costs. It is essential to be talked about but the scope of areas discussed in these paragraphs is narrow in some extent.
Chapter Four Improvement by Taking Extra Considerations 第四章 通過采取額外的注意事項(xiàng)改進(jìn)
4.1 Broaden the Reporting Entities
As described in the IASB and FASB’s preliminary views, the Conceptual Framework should broadly describe a reporting entity as “a circumscribed area of business activity of interest to present and potential equity investors, lenders and other capital providers”. However, in the Exposure Draft, the major focus is put on the private sectors limited to business behaviors that are considered to be legal. In the reality, some entities in the public sector that are not legal are equally important; thus, some changes or new things need to be added in the concepts of Framework.
4.2 Need for Description of Not-For-Profit Entities
Due to a wider range of users included in the not-for-profit entities, there is a requirement of a different and unique description of entities of financial reporting as well as some specific descriptions of issues that may arise in determining the reporting entity in the not-for-profit sector. Furthermore, it may also be helpful to add in some concepts of control in order to enable the Framework conducted more effectively in a public context.
4.2.1 A Requirement of Different Descriptions of Not-For-Profit Entities
The consideration of the Objective of Financial Reports in the Exposure Draft for the focus on capital providers as the primary users of financial reports is not enough to apply in various accounting sectors. In the not-for-profit entities, the members should also be taken one part of the primary user groups in financial reporting. Thus, in some paragraphs of the Exposure Draft, especially in the description and preface of reporting entities, the identification of not-for-profit sector users need to be reflected in a comprehensive way. If the amendment can be improved on this point, the Exposure Draft can be definitely differed from the existing Conceptual Framework published by the IASB and FASB.#p#分頁標(biāo)題#e#
4.2.2 Some Descriptions of Issues Arising from Determination of Reporting Entities
Some potential issues in relation to the not-for-profit sector are not mentioned in the Exposure Draft, which may bring in benefits for the public sector users or for the development of standards setting. Consequently, it would be better off including some specific descriptions about public sector issues in the amended Framework.
4.2.3 Add in the Concept of Control
Some further considerations are essential for the Exposure Draft to take. Apart from adding into some descriptions of reporting entities identification and issues of not-for-profit sector users, the concept of control is the basis for determining those two things. The concept of control can be the regulation of deciding whether the definition of not-for-profit entity is appropriate and whether there are some areas could be advanced as to achieve effectiveness in standards making. In addition, the concept of control should be made to imply the relationship of two or more entities and lead them to a correct direction to achieve the objective of financial reports.
All in all, the most important things that need to be attached importance of the Boards are the recognition and identification of not-for-profit sectors as well as the capital providers in the private sector, and the specific descriptions of the determination and concepts of control about the issues that may arise from not-for-profit entities.
Chapter Five Conclusion
As stated in the new publication of IASB and FASB’s joint project “An Improved Conceptual Framework for Financial Reporting – Chapter 1 The objective of Financial Reporting; Chapter 2 – Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information”, the Boards (IASB and FASB) decided to identify present and potential capital providers as the primary user group for general purpose financial reporting. However, it is suggested by our group that not-for-profit entities need to be regarded as another part of the primary users of financial reporting as the result of their equal importance in the accounting businesses. Moreover, decision usefulness should encompass both resource allocation decisions and also the need for management to be accountable for the public sectors.
With regard to Chapter 2 of the Exposure Draft, the decision to introduce two separate types of qualitative characteristics seems sensible to add more value to the information being provided. In our group’s views, the fundamental qualitative characteristics are now appropriately identified and sufficiently defined to be understood. Furthermore, the four enhancing characteristics are clearly defined and identified and should be understood fairly easily by users both in private and public sectors. We also believe that the two constraints are appropriately identified when linked to the basis for conclusions.#p#分頁標(biāo)題#e#
Some areas that need to be changed or amended has been examined in the previous chapter of this paper, including the need for identification of not-for-profit sector users as one of the reporting entities; the determination of which kinds of users can be the group users; the descriptions of issues arising from public sectors’ business activities and the statement of concepts of control associated with the issues of not-for-profit entities.
Appendix 附言
Hierarchy of Desirable Characteristics of Accounting Information
Source: International Accounting Fully Revised for SFAS 158, http://highered.mcgraw-hill.com/
References and Bibliography
Books and Journals
Australian Accounting Standards Board, 2008 “An improved Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information” ISSN 1030-5882, issued in May 2008
The New Zealand Equivalent to the IASB Framework, 2008 “Framework for the Preparation and Presentation of Financial Statements” Tuesday, 14 October 2008
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