Conceptual Framework—Phase F: Framework Purpose and Status in GAAP Hierarchy (Inactive)
Latest revisions: As of 4, February 2008 (Updated sections are indicated with an asterisk *)
This project update summarizes the project activities and decisions of the IASB and FASB (the Boards). It was prepared by the staff and is for the information and convenience of the Boards’ constituents. All decisions of the Boards are tentative, may change at future Board meetings, and do not change current accounting and reporting requirements. Decisions of the Boards become final only after extensive due process.
The objective of Phase F, Framework Purpose and Status in GAAP Hierarchy, is to consider the framework’s authoritative status for each Board. The goal is to develop a framework that is of comparable authority for the use of both Boards in the standard-setting process.
*Decisions Reached at the Last Meeting
*Summary of Decisions Reached to Date
At present, there are differences in the status of the Boards’ existing frameworks. For an entity preparing financial statements under International Financial Reporting Standards (IFRS), the IASB’s Framework provides guidance when there is no standard or interpretation that specifically applies to a transaction or other event or condition, or that deals with a similar and related issue. In those situations, the entity’s management is required to consider the definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework. Under US GAAP, the FASB’s Concepts Statements have a much lower status—they are ranked no higher than accounting textbooks, handbooks, and articles, and below widely recognized and prevalent general or industry practices.
The FASB has decided that the authoritative status of the framework within the US GAAP hierarchy should be considered once the framework is more substantially complete. However, for the purposes of providing comments on documents issued by the Boards, respondents will be asked to assume that the framework’s authoritative status will be elevated in the US GAAP hierarchy to have a status comparable to the IASB’s current Framework.
The Boards agreed that each Board, within the context of its current GAAP hierarchy, will finalize the common framework as parts are completed and that later parts may include consequential amendments to earlier parts. The Boards noted that the decision of how to finalize the joint framework may need to be readdressed when the Boards discuss the placement of the framework within the IASB and FASB hierarchies.
This phase is currently inactive. The Boards directed the staff to focus on the near-term priorities and the first four phases of the project before beginning work on presentation and disclosure.
*Board/Other Public Meetings