Financial Reporting : The International Accounting Standards Board

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The IASB (The International Accounting Standards Board ) issued Exposure Draft ED/2015/3 Conceptual Framework for Financial Reporting on 28 May 2015, which proposes the changes for the Conceptual Framework . The conceptual framework define the objective and the purpose of the financial reporting. Exposure Draft proposed include the revisions of Conceptual Framework such as , the definitions of the financial statements, recognition and derecognition , measurement , presentation and disclosure and items in Other Comprehensive Income . The reason why IASB is improving the Conceptual Framework is because of lack clarity such as : some important topic are not covered , the guidance are unclear and some aspects are out of topic. The objective of this proposal is to develop financial reporting by providing clear and complete concept, depends in some area which are mention or not mention in details. This report include differences between debt and equity in IFRS, approaches that should be included in the Other Comprehensive Income and criticism of lack of clarity and consistency in the framework. The difference between equity and liability , it is important for the entities because its affects their dividends, interests, losses and gains which are recognized in equity or are included in the profit for each year. Also, the difference affect solvency rations and leverage, that may have an effect in the debt covenant and also may be sufficient, if the business is mandatory
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