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Bring back prudence
13 January 2014
The FRC believes the concepts of prudence, stewardship and reliability should be reintroduced to the international accounting standards Conceptual Framework, as they are fundamental to financial reporting.
The FRC comments are made in response to the IASB's discussion paper on its conceptual framework, which sets out the concepts that underlie the preparation and presentation of financial statements.
The FRC's Melanie McLaren said it welcomed the emphasis placed on the importance of the profit and loss account as well as the balance sheet, the the recognition that financial reporting should not be based entirely on market values.
That said the FRC feels that the IASB made changes (in 2010) that downplayed the ideas of prudence stewardship/accountability and reliability. It has now said that it will reconsider this in the light of work on the rest of the conceptual framework.
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