EBA欧洲银行-cebs1247_2010-07-13-28CEBS-commments-ED-Reporting-entity29_5页_166kb

CEBS Comments on IASB's Exposure Draft ED/2010/2: Conceptual Framework for Financial Reporting - The Reporting Entity

Core Content

The Committee of European Banking Supervisors (CEBS) has provided comments on the IASB's Exposure Draft (ED/2010/2) titled Conceptual Framework for Financial Reporting: The Reporting Entity. CEBS, composed of high-level representatives from European banking supervisory authorities and central banks, emphasizes the importance of promoting sound, high-quality accounting and disclosure standards in the financial sector, as well as transparent and comparable financial statements to strengthen market discipline.

CEBS supports the IASB's ongoing efforts to improve financial reporting and agrees with the need for a sound conceptual framework to ensure that accounting standards are principles-based and internally consistent. They stress that the development of a common conceptual foundation between IASB and FASB is essential for the convergence of international standards.

Main Views

• Reporting Entity Concept: CEBS agrees with the concept of a reporting entity based on user needs and supports the three features outlined in RE3. However, they raise concerns about the interaction of these features with the identification of reporting entities in specific situations, particularly when these features are not sufficient.

• Clarification of Control: CEBS believes that the concept of reporting entity should primarily be governed by user needs and defined based on the features in RE3. Control is considered a subordinate concept. The Board should clarify how the notion of control interacts with the reporting entity's boundaries and how it applies in the context of consolidated, combined, or solo financial statements.

• Branch as Reporting Entity: CEBS agrees that a branch can be a separate reporting entity, as some EU jurisdictions require foreign branches to prepare financial statements. However, they express concerns about the implications of allowing a portion of an entity to be a reporting entity, which may conflict with existing IFRS 8 requirements on operating segments.

• Financial Statements for Different Entities: CEBS notes that the needs of financial statement users vary, especially between parent and non-controlling shareholders. They recommend that the conceptual framework should not restrict the preparation of subsidiary-only, sub-consolidated, or combined financial statements, as these can provide useful information. CEBS also suggests that the list of decision-useful financial statements should be expanded to include all relevant types.

• Joint Ventures and Common Control: CEBS highlights that in the case of joint ventures, where no single party has control, disclosures are still important to inform users about the investment of each party. They recommend that the definition of a reporting entity should be based on user needs and that combined financial statements may be appropriate for entities under common control, even without a direct control relationship.

• Negative Benefits: CEBS questions the understanding of "negative benefits" in the context of control. They recommend that the ED clearly explain the link between risk and negative benefits, and suggest that the term "benefits" might be replaced with "returns" to align with the definition in ED10.

• Ongoing Evaluation of Reporting Entity Boundaries: CEBS supports the idea that the boundaries of a reporting entity should be assessed on an ongoing basis, but they also emphasize the need to address how changes in these boundaries interact with the concept of business combinations under IFRS 3.

Key Concerns

• The authoritative status of the conceptual framework differs between IFRS and US GAAP, which may affect its implementation and understanding.
• The interaction between control and reporting entity boundaries needs further clarification.
• The definition of a reporting entity should be based on user needs, not just legal structures.
• The concept of negative benefits is unclear and requires elaboration.
• The list of decision-useful financial statements should be expanded to avoid conflicts with national legislation.
• The use of combined financial statements for entities under common control or without control relationships should be considered more clearly.

Conclusion

CEBS generally supports the IASB's approach to defining the reporting entity but calls for further clarification and expansion of the framework to ensure consistency, clarity, and alignment with legal and regulatory requirements across jurisdictions.