Question 17—Long-term investment Do you agree with the conclusions on long-term investment? Why or IASB’s why not? We agree with the conclusions of the IASB that long term investors can be served by the current formulation of the CF. Question 18—Other comments Do you have comments on any other aspect of the Exposure Draft? Please indicate the specific paragraphs or group of paragraphs to which your comments relate (if applicable). As previously noted, the IASB is not requesting comments on all parts of Chapters 1 and 2, on how to distinguish liabilities from equity claims (see Chapter 4) or on Chapter 8. In our view the inclusion in 1.6 of the other sorts of information that might be needed should be improved. There has been a general reassessment of the importance of non-financial information in corporate reporting to which the CF should respond. The Integrated Reporting is one such indication of the wider perspective that is needed. Management Commentary IASB’s own guidance points to different factors than are currently included in 1.6. Chapter 8 introduces the concept of capital maintenance adjustments, however these are not included among the elements discussed in Chapter 4 nor appear on the diagram at 5.6 for example. In 8.4 such adjustments are regarded as expenses, but in 8.8, 8.9 and 8.10 they seem to be specifically excluded from being expenses. They therefore undermine the main model. Furthermore the non-application in IFRS of the concepts of capital maintenance needs to be made clearer than it is in 8.9. Capital maintenance adjustments as far as we are aware are not being specifically required in IFRS at present. For both these reasons we think the whole of Chapter 8 would be better removed from the CF for now and reconsidered.
Question 17—Long-term investment Do you agree with the IASB’s conclusions on long-term investment? Why or why not? We agree with the conclusions of the IASB that long term investors can be served by the current formulation of the CF. Question 18—Other comments Do you have comments on any other aspect of the Exposure Draft? Please indicate the specific paragraphs or group of paragraphs to which your comments relate (if applicable). As previously noted, the IASB is not requesting comments on all parts of Chapters 1 and 2, on how to distinguish liabilities from equity claims (see Chapter 4) or on Chapter 8. In our view the inclusion in 1.6 of the other sorts of information that might be needed should be improved. There has been a general reassessment of the importance of non-financial information in corporate reporting to which the CF should respond. The Integrated Reporting is one such indication of the wider perspective that is needed. IASB’s own Management Commentary guidance points to different factors than are currently included in 1.6. Chapter 8 introduces the concept of capital maintenance adjustments, however these are not included among the elements discussed in Chapter 4 nor appear on the diagram at 5.6 for example. In 8.4 such adjustments are regarded as expenses, but in 8.8, 8.9 and 8.10 they seem to be specifically excluded from being expenses. They therefore undermine the main model. Furthermore the non-application in IFRS of the concepts of capital maintenance needs to be made clearer than it is in 8.9. Capital maintenance adjustments as far as we are aware are not being specifically required in IFRS at present. For both these reasons we think the whole of Chapter 8 would be better removed from the CF for now and reconsidered.
50_5817_RichardMartinACCA_0_conceptualFrameworkResp1115.docx