IS THERE A ROLE FOR PRUDENCE?

摘要

Part of the conceptual framework debate is the question of whether the new framework should make any explicit reference to prudence. The European Financial Reporting Advisory Group (EFRAG) thinks that the framework should address the issue and specify that caution should be used in making estimates. The International Accounting Standard Board's (IASB) July Discussion Paper says that prudence is inconsistent with the desired characteristic of neutrality. Nonetheless, IASB chairman Hans Hoogervorst argued in a speech last year that exercising caution in making estimates was only common sense, and was implicit in International Financial Reporting Standards (IFRS). The issue also intersects with the removal of the quality of 'reliability' from the conceptual framework.