Publication of the Paper regarding the Concept of “Profit or Loss”

27 December 2013

The International Accounting Standards Board (IASB) initiated its work to review The Conceptual Framework for Financial Reporting, responding to the feedback received to its public consultation Agenda Consultation 2011. On 19 July 2013, as part of its work, the IASB published the Discussion Paper (DP) A Review of the Conceptual Framework for Financial Reporting (hereinafter the “Conceptual Framework”).

The IASB’s existing Conceptual Framework does not specifically discuss what role “profit or loss” should play in reporting financial performance. The DP proposes that the Conceptual Framework should require presenting “profit or loss” as a performance indicator, but it does not propose to define “profit or loss” as one of the elements of financial statements.

The Accounting Standards Board of Japan (ASBJ) has repeatedly stated its view that “profit or loss” is critical in reporting financial performance. Therefore, the ASBJ prepared an agenda paper for the meeting of the Accounting Standards Advisory Forum (ASAF) which was held on 5 December 2013. During the meeting, the ASAF discussed the paper including the relationship between “profit or loss”, other comprehensive income and measurement.

The ASBJ will use the paper as a starting point for continuing to participate in the global discussion regarding what role “profit or loss” should play in reporting financial performance.

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