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If you believe OCI reporting should be retained, can and should it have a conceptual framework?


The Conceptual Framework helps the IASB clarify its thinking for the development of any future standards. But with Other Comprehensive Income (OCI), we should be careful what we ask for.

For the past few years, the IASB has been steadily developing its Conceptual Framework, the theoretical structure on which its standards hang. But can the Framework answer every question? And should it?

When it comes to OCI, the answer is apparently ‘No’. OCI – what is it and how should it be presented – has been on the IASB’s agenda in one form or another for the past few years. One of the difficulties has been the lack of a definitive view of what OCI means, either within the IASB itself or among the wider profession. Not that that stops companies from using it widely – we asked the conference if OCI should be retained, and only 15% said that it should be dropped.

So perhaps a theory around OCI would help. We asked delegates whether they thought that a conceptual framework could and should be developed for OCI. 41% said it was possible, and should be done. Only 14% felt it was impossible. “People expect way too much of the Conceptual Framework,” warned IASB Chairman Hans Hoogervorst. “It might help us move our thinking forward, but all of the tough questions have to be dealt with at standards level.”

Mr Hoogervorst added: “The truth is that there’s no perfect answer for OCI”. IASB member Stephen Cooper agreed, pointing out that very few people had put forward any suggestions for defining OCI during the IASB’s extensive outreach. And perhaps, he hinted, we should be wary about asking the IASB to come up with a theoretical approach: “I think we could come up with a framework for OCI. But you may not like it.”

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