Analysis of IASB Draft: Corporate Reporting Theory and Practice Review

This report critically reviews and analyzes comments related to the IASB's proposed draft on corporate reporting, focusing on the views of interested parties and potential improvements. It discusses key features of financial statements, including relevance, faithful representation, and comparability, while considering feedback on historical cost, fair value, and prudence. The report highlights various comments on the definitions of assets, liabilities, and profit and loss accounts, and the need for consistent improvement in IASB concepts. It concludes that incorporating these reviews can enhance the usefulness of financial information and decision-making, though potential complexities and delays in implementation must be considered. Desklib offers access to similar solved assignments and study resources for students.

CORPORATE REPORTING
THEORY AND PRACTICE

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Critical review and making an analysis of the reports and comments would lead to play an
important role in raising of efficiency and concepts of the decision making. This report will
discuss about the concept that is related with the consideration of comments and views of
interested parties and making an improvisation of the proposed draft of IASB.
MAIN BODY
The features that must be possessed by the financial statements must include certain features
that may include the relevance, faithful representation, comparability, timeliness, verifiability,
under stability, cost constraints including historical and other cost, definition related with
elements of financial statements and various other would play an important role in terms of
business decision making. However, on a critical note it is right to said that as per the views and
feedback comments, the meaning and perspective of the financial aspects including the historical
cost, fair value, prudence concepts and various other have changed. It would be right to said that
various financial feedback comments have improvised the overall paragraph of chapter-6.
This can be justified with the various comment letter which denotes that daily updating of
financial values as per the changes in economy and its condition is important. In the same way
with the aspect of drafted chapter and the concept of Prudence was agreed as per certain
comments. However, some comments were strictly against the definition which were prescribed
in draft including assets like it does not explain the objects (Verhille, 2015). In the same way
some said that the assets is a right or it is a claim. Some comment said that there is defects in
terms of process of development, unit of measurement, historical cash flows and various other
(ENRIQUE FOWLER NEWTON, 2015). As per another comment the items that would be
included in the profit and loss account including long term investment and changes in the value
must not be a part of the P&L. few comments are in the favour that the financial statements must
include the promissory notes that will detail out the information of it. As per certain views the
financial statements that are reported by the entity must linked with the economic activity. Few
comments are in in the views that IASB need to make an improvement in its concepts on a
consistent basis that will lead to make them updated. Few said that as an investor is highly

interested in the return that would be related with the investment so P&L must depict the true
return generated during a period (TEMASEK, 2015).
Some were not agree with the concepts and definition of the assets and other aspects.
Majority of comments were concerned with the aspect of financial reporting, concept of
prudence, fundamental characteristics of the financial information which shows that need to be
improved. With this perspective the confusion would be reduced and more clarity would be
presented. As per those views they also said that the definition that are related with the assets,
liabilities, income, expenses, equity need not much improvement because the definition that was
given by IASB is adequate. In the same way few comments are related with the concept of
reporting entity that it need to be the one who prepare the financial statements (
UNIVERSITY
OF TECHNOLOGY, SYDNEY, 2015). Apart from changes majority of comments states that
they agree with the definition and the concepts that was given in the proposed draft. Few
comments said that the concept of stewardship is needed to be expanded and cleared. As per the
comment of Samtani, (2015) it is states that the definition and concept of equity need to be
define independently apart from the capital. As per certain views the concept of stewardship
must be an objective of financial reporting. Few comments are in the views that the there is no
need and possibility that there must be the single measurement system but they agree that as per
the assets and liabilities the governance and measurement system must be operated (The Swedish
Financial Reporting Board, 2015).
As per the views of Hoogervorst, (2015) it is to raised a comment that the dealing with
financial statement is not clear that how to make deal with it. In the views of UKSA the concept
of prudence need to be clearly explained and expanded. Some comments said that the concept of
faithful ness need to be more expanded so that more clarity will be brought forward. However as
per Yang, (2015) it is noted that the concept of economic activity within a limited range i.e. there
is a need to get broadened up this range so that the entity and non-entity will be covered. In the
same way another important comment that is made is included the concept of auditability which
means that the financial statement must be audible which shows that the concerned user need to
take understanding from it. In the same way comments of Israel Accounting Standards Board
(IASB), (2015) are in the views that consolidated financial statements are counted as more useful
in providing information to the concerned personnel.

In the same way apart from the comment letter the basis of feedback summary also states
that further research was need before the issue of measurement chapter. However as per the
general views it is also observed that the historical cost of asset need to be include the concept of
depreciation so that the value of the assets will be justified. Majority of comments also states that
the consideration of the objective of financial reporting, qualitative characteristics, cost
constraints need to be the result in the selection of various measurement concepts. Thus in short
it contains the summary of all the comments that would lead to draw conclusion related with the
financial statements, its reporting, concept of P&L, value aspect, historical cost concept and
various other that is agreed by some interested parties while some suggested modification.
While considering the conclusion it is noted that the financial statement need to be relevant so
that the necessary decision related with the concerned business would be taken adequately. In the
same way it is also concluded that the relevance of the measure is depended upon the aspect that
how the investor, lenders and creditors are likely to access the assets and the liabilities. In the
same way the other aspect related with entity, faithful representation, verifiability, comparability,
understand ability, timeliness cost concepts are also discussed in the conclusion chapter that
would contribute and linked with the financial statements and report.
With regard to the above review and various aspects it can be said that the IASB report
and the amendments that are related with the views and comments would play an important role
in terms of making an improvisation in the concepts and the financial aspects. This is because
making a consideration towards the comments would lead to make an improvisation of the
definition. This will lead to bring more clarity and meaningfulness (Barker, 2020). However,
while considering various views it can be said that instead of bringing the clarity more confusion
in terms of various meaning and perspective would be created. this has also shows that as per the
various views of investors and other concerned stakeholders the meaning and the definition of
P&L, and other financial statements would differ because of the various aspect and motive. this
can be justified with the investor perspective and view which is interested towards the
profitability of the company while the owners are related with the overall financial performance.
On a critical note it is to be noted that if these comments and reviews and perspective
would not be considered then it will lead to reduce the impact and implementation of the
proposed draft of IASB. This means the proposed draft of the IASB is although adequate with
many aspects but at the same time a non-consideration of the comments would make the

presence of the loopholes in the proposed draft that would be difficult for the organization in
terms of making its implementation. As if the meaning of the assets, liabilities, equities, concept
of P&L and other aspects would not be clear then it will lead to impact the major aim of the draft
(CARUNGU, 2017). This means the purpose behind the draft would be affected. thus making a
focus over the concerned concepts is highly relevant and important in terms of enhancing the
decision making power and capacity of the company.
While making the above analysis it can also be said that giving a consideration towards the
comments and the financial aspects would lead to play an important role in improving the
usefulness of financial information that would further assist the decision making. This means that
through the consideration of the concepts and views of various personnel and stakeholders the
information and concept need to be updated which will further assist the decision making and
understating of the financial concepts and the statements (Zanolla and Antunes, 2020). In the
same way it is also to be noted that with the aspect of making a consideration towards the
comments and other points the exposure draft would become more complete in terms of
measurement, financial performance, reporting entity, derecognition, presentation and disclosure.
With a consideration towards the aspects of the comments and making it inculcate in the
exposure draft would lead to make it improved in terms of definition, role of prudence and
various other.
However, on the critical note with the aspect of the comments given by interested parties
suggested that it will instead of making the process of decision making to be easy would make it
complex because through this mode the decision would be delay. Although it will have raised the
efficiency of decision making but making a deep analysis and implementing regular amendments
would lead to impact the IFRS and its aim in term of its execution (CONSULTATIONS and
BOARD, 2018).
Thus it would be right to said that the consideration of the criteria that is associated with the
measurement criteria would lead to play an important role in improving the usefulness of
financial information that would further be associated with the decision making improvement.
This means through the mode of making a continuous improvement and making amendments in
the draft proposal would lead to make improvisation in decision making and thus the most
appropriate decision from the perspective of various stakeholders will be taken.

CONCLUSION
From the above review it can be concluded that making an amendments and considering the
reviews of the various interested parties would lead to play an important role in decision making
and raising of efficiency of the proposed draft of the IASB. It will lead to raise the quality,
clarity, easiness with respect to decision making.

REFERENCES
Books and journals
Barker, R., 2020. Comment Letter on IASB Exposure Draft General Presentation and
Disclosures.
CARUNGU, J., 2017. Reforming the IASB Conceptual Framework: A study on the documents
through the content analysis method.
CONSULTATIONS, O. and BOARD, E., 2018. EFRAG UPDATE JUNE 2018.
Policy.
Zanolla, E. and Antunes, G.A., 2020. ANALYSIS OF EVIDENCES FOR THE FAIR VALUE
IN THE NEW CONCEPTUAL STRUCTURE OF ACCOUNTING.
Online references
ENRIQUE FOWLER NEWTON., 2015. [Online]. Available through
<http://eifrs.ifrs.org/eifrs/comment_letters//50/50_5237_EnriqueFowlerNewton_0_E
nriqueFowlerNewton.pdf >
Hoogervorst, H, 2015. [Online]. Available through
<http://eifrs.ifrs.org/eifrs/comment_letters//50/50_5625_RobertDohrerRSMInternatio
nal_0_RSMCommentonConceptualFrameworkforFinancialReporting.pdf >
Israel Accounting Standards Board (IASB)., 2015. [Online]. Available through
<http://eifrs.ifrs.org/eifrs/comment_letters//50/50_5837_DovSapirIsraelAccountingSt
andardsBoard_0_commentlettertoIASBEdMay2015conceptualframework.pdf >
Samtani, V., 2015. [Online]. Available through
<http://eifrs.ifrs.org/eifrs/comment_letters//50/50_5854_VishnuSamtaniIndividual_0
_CL35VishnuSamtaniindividual.pdf >
TEMASEK., 2015. [Online]. Available through
<http://eifrs.ifrs.org/eifrs/comment_letters//50/50_5271_WaiLengLeongTemasekHol
dingsPrivateLimited_0_ConceptualFrameworkLettertoIASB.pdf >
The Swedish Financial Reporting Board, 2015. [Online]. Available through
<http://eifrs.ifrs.org/eifrs/comment_letters//50/50_6676_AndersUllbergRdetfrfinansie
llrapporteringTheSwedishFinancialReportingBoard_0_SwedishFinancialReportingBo
ardCommentonConceptualFrameworkforFin.pdf >
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UNIVERSITY OF TECHNOLOGY, SYDNEY., 2015. [Online]. Available through
<http://eifrs.ifrs.org/eifrs/comment_letters//50/50_5308_PeterWellsUniversityofTech
nologySydney_0_ConceptualFrameworkforFinancialReporting.pdf>
Verhille, R., 2015. [Online]. Available through
<http://eifrs.ifrs.org/eifrs/comment_letters//50/50_5236_RolandVerhilleIndividual_0
_RolandVerhille.pdf>
Yang., J., 2015. [Online]. Available through
<http://eifrs.ifrs.org/eifrs/comment_letters//50/50_6681_JingYangIndividual_0_Jing
Yang_commentlettertoIASBonconceptualframework.pdf >
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