In a significant step toward more solid and relevant accounting standards around the world, the International Accounting Standards Board and the Financial Accounting Standards Board have rolled out two joint discussion documents that may indicate where the boards are going in their project to improve and converge their conceptual frameworks.One document, The Objective of Financial Reporting and Qualitative Characteristics and Constraints of Decision-Useful Financial Reporting Information, is a proposal for the first two chapters of the framework. The other is a preliminary views document that suggests directions the board might take on defining the reporting entity.
FASB project manager Jeffrey Johnson said that a cohesive framework is essential to setting comprehensive accounting standards. “Standards set across a double body of standard-setting aren’t going to have integrity unless we have a cohesive framework that we can base them on,” he said, “So we think the first two chapters of the framework — particularly the objectives — set the tone [for the entire framework].”
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