Limited Scope Update of Conceptual Framework


The project objective is to update the Conceptual Framework for a limited number of issues based on the criteria of urgency, consequences, feasibility and prevalence with a particular emphasis on the first three of these criteria.

Current Status of the Project

Conceptual Framework Update: Chapter 7, Measurement of Assets and Liabilities in Financial Statements.

At its December 2022 meeting the IPSASB clarified the relationship between transaction price and transaction costs and historical cost. The IPSASB then approved the updated Chapter 7, Measurement of Assets and Liabilities in Financial Statements.  

The IPSASB will use the updated version of Chapter 7 as part of its process of developing standards.  The updated version of Chapter 7 will be published with the suite of measurement related guidance (IPSAS [XX], Measurement, IPSAS [XX], Property, Plant, and Equipment). The last piece of this suite of guidance, IPSAS 46, Measurement was approved in March 2023.

Conceptual Framework Update: Chapter 3, Qualitative Characteristics and Chapter 5, Elements. 

At the December meeting the IPSASB reviewed four specific matters for comment related to assets and liabilities in ED 81, Conceptual Framework Update;- Chapter 3, Qualitative Characteristics and Chapter 5, Elements in Financial Statements. The IPSASB decided to adopt the revised definitions of a liability and an asset as proposed in ED 81 and also, as proposed in that ED to: 

  •  Include restructured guidance that aligns with the components of the liability definition and new guidance on the transfer of resources; and  
  • Adopt the rights-based approach to the guidance on resources in the definition of an asset. 

At the February virtual meeting the IPSASB reviewed responses to two further SMCs in ED 81 and agreed to include:

  • A subsection on Unit of Account in the updated Chapter 5, Elements  in Financial Statements; and
  • Guidance on Accounting for Binding Arrangements that are Equally Unperformed, in a separate sub-section.

At the March meeting the IPSASB approved updated Chapter 5.

The IPSASB reviewed the final two SMCs in ED 81, both of which related to Chapter 3, Qualitative Characteristics. The IPSASB decided that:

  • The approach to prudence in ED 81, should be retained in the updated Chapter 3, with some additional explanation of asymmetry; and 
  • Guidance on obscuring information as a factor related to materiality judgments exposed in ED 81, should be included in updated Chapter 3, subject to deletion of the final sentence of paragraph 3.32 on the disclosure of material items that are not separately displayed or displayed sufficiently prominently on the face of a financial statement.

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