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11/01/2016 - Summary report of EFRAG Outreach Event on Conceptual Framework For Financial Reporting in Brussels

EFRAG is pleased to publish a summary report of its outreach event in Brussels on 23 September 2015.


In May 2015, the IASB published an Exposure Draft ED/2015/3 Conceptual Framework for Financial Reporting (the 'ED'). Also in 2015 EFRAG agreed to co-sponsor an empirical study of how financial information is used. This study involved interviews of users that had experience with investment decisions, for example as buy-side analyst or fund manager. The motivation for the academic study on the information needs of users and its results were presented at the outreach event.

The purpose of the outreach event was to obtain input from European constituents, receive input for EFRAG's comment letter and for the IASB; and learn whether the preliminary comments, as set out in EFRAG's draft comment letter, were shared by European constituents.

The speakers and the panel comprised Theodor Dumitru Stolojan, MEP and Member of the EP Committee on Economic and Monetary Affairs (ECON); Liz Murrall, Stewardship and Reporting, The Investment Association and Member of ICAS Research Committee; Beatriz García Osma, Professor at the Autonomous University of Madrid; Thomas Jeanjean, Professor at ESSEC Business School in Paris; Anne McGeachin, IASB Technical Principal; Peter Malmqvist, Chairman of the Swedish Association of Financial Analysts and Member of the EFRAG User Panel; Peter Sampers, Chairman of the Dutch Accounting Standards Board and EFRAG Board Member; Patrick de Cambourg, President of the French ANC and EFRAG Board Member; Erlend Kvaal, Chairman of the IFRS Technical Committee of the Norwegian Accounting Standards Board; Françoise Flores, EFRAG TEG Chairman and Patricia McBride, EFRAG Technical Director. The summary report of the event describes the main comments received in the event.

The main observations made can be summarised as follows:

  • The results of an academic study sponsored by EFRAG and the ICAS showed that professional investors are strongly anchored on P&L. The study also showed that, in general, professional investors consider financial reporting information to be relevant and faithfully represented for both valuation and stewardship assessment decisions.

  • Although the IASB's proposals are an important step forward, panel members agreed that there is still room for improvement, particularly on the notion of stewardship and definition of financial performance. For example, some panel members considered that the IASB should have been "courageous" to include stewardship as a separate objective and better define what financial performance is.

  • Panel members also encouraged the IASB to further clarify the meaning of OCI, how the distinction between P&L and OCI should be made and when there should be recycling. Some panel members also highlighted the importance of the notion "realised gains or losses".

  • Panel members considered that the concept of 'business model' was important for investors and that P&L should be closely linked to the entity's business model and management's view over the performance of the business.

  • Some panel members emphasised the importance of having a "living conceptual framework" updated over time and considered that conceptual framework improvements should be seen as an ongoing process.

  • A panel member thought that it would be useful to compile the guidance and principles on financial reporting that already exist in European Union law and subsequently compare the key findings with the IASB's proposals.

  • If investors were focused on income statement items and non-GAAP metrics based on earnings (e.g. EBITDA and EBIT), then the IASB should also focus on defining income statement items such as EBIT and  EBITDA.