EBA欧洲银行-EBA-Comment-Letter-on-IASB-DP-Conceptual-Framework_7页_448kb

EBA Comments on IASB's Discussion Paper: A Review of the Conceptual Framework for Financial Reporting

Core Content

The European Banking Authority (EBA) has provided detailed comments on the IASB's Discussion Paper (DP) DP/2013/1: A Review of the Conceptual Framework for Financial Reporting. The EBA emphasizes the importance of maintaining high-quality, transparent, and comparable accounting and disclosure standards for the banking and financial industry. They welcome the IASB's initiative to update the Conceptual Framework (CF) in line with the views from the IASB Agenda Consultation, but also highlight areas that require further clarification and development.

Main Views and Key Information

1. Reintroduction of Prudence

• The EBA supports the reintroduction of the concept of prudence in the revised CF, aligned with the pre-2010 definition.
• Prudence should be defined as caution in the exercise of judgments and estimates under uncertainty, not as bias toward conservatism.
• They note that prudence is already embedded in certain standards (e.g., IAS 37) and is not inconsistent with neutrality.

2. Probability Threshold and Uncertainty

• The EBA expresses concerns over the removal of the probability threshold from the definitions of assets and liabilities and the recognition criteria.
• They believe that uncertainty should still play a key role in the recognition and measurement of assets and liabilities.
• Further clarification is needed on how uncertainty will be addressed in the absence of the probability threshold.

3. Interaction with Existing Standards

• The EBA is worried that the revised CF may conflict with current standards, particularly in areas such as:
  • Derecognition of repurchase agreements based on the "control" versus "risk-and-rewards" approaches.
  • Distinction between equity and liabilities, especially in cases involving financial instruments with variable delivery obligations.
• They suggest that the CF should not address detailed technical issues but instead provide high-level principles, with specific treatments left to individual standards.

4. Presentation of Profit or Loss and Other Comprehensive Income (OCI)

• The EBA supports the separation of profit or loss from OCI.
• However, they believe the CF needs further conceptual analysis on:
  • The purpose and definition of profit or loss and OCI.
  • The conditions under which recycling should occur.
• They argue that the DP proposals seem to reinforce current practices rather than address the key conceptual questions.

5. Equity Definition and Disclosure

• The EBA supports the current definition of equity as the residual interest in an entity's assets after deducting liabilities.
• They are concerned that the revised liability recognition criteria may lead to misclassification of instruments (e.g., financial liabilities reclassified as equity).
• They welcome the new disclosure requirements on wealth transfers, which could aid in distinguishing between liabilities and equity.

6. Stewardship and Business Model

• The EBA recommends reintroducing stewardship as an objective of financial reporting, particularly for assessing future cash flow prospects.
• They also support the consideration of the business model in defining appropriate measurement methods, as outlined in Section 6 of the DP.

Additional Recommendations

• The EBA suggests that the IASB should:
  • Provide more principles and application guidance on constructive obligations and economic compulsion.
  • Clarify the definition and application of 'practical ability' in the context of present obligations.
  • Ensure consistency in the interpretation and application of the CF and standards.
  • Conduct a thorough analysis of the impact of removing the probability threshold on asset and liability recognition.
  • Address specific issues in individual standards rather than in the CF itself.

Conclusion

The EBA believes that the revised CF has the potential to improve the relevance and usefulness of accounting principles for both the IASB and financial statement users. However, they emphasize the need for careful alignment with existing standards and clear conceptual guidance to avoid unintended consequences in financial reporting. They also stress the importance of stability in the CF and the need to maintain a clear distinction between high-level principles and detailed standard requirements.