Discussion of ‘Conservatism, prudence and the IASB's conceptual framework’ by Richard Barker (2015)

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Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. Similarly, when annual accounts are reproduced in rights issue prospectuses, their purpose is to allow the shareholders to assess whether they are being asked to fill an existing black hole or provide new money for new business activity that might generate additional dividends.

2. Although not applicable until 2018, companies do have an obligation to disclose the likely effect of the change before then if it could be material.

3. I do not have time here to quibble over the revised IFRS9's restriction of looking at losses expected only in the next 12 months, beyond saying that I see it as an unnecessarily imprudent aspect of the revision.

4. I see a distinction between the necessary ‘prudence’ in accounting judgements and the bias of ‘conservatism’ created by excessive prudence. In Professor Barker's paper, there is no such distinction and for the purposes of today's discussion that is a second-order issue.

5. Even if only a partial expected loss model.