How Does the IASB Use the Conceptual Framework in Developing IFRSs? An Examination of the Development of IFRS 16 Leases

Journal of Financial Reporting In-Press. DOI.org/10.2308/jfir-52232

Posted: 2 Sep 2018

See all articles by Humayun Kabir

Humayun Kabir

Auckland University of Technology

Asheq Rahman

Auckland University of Technology - Faculty of Business & Law

Date Written: August 24, 2018

Abstract

We examine how the International Accounting Standards Board (IASB) used the Conceptual Framework for Financial Reporting (Framework) in developing the new lease accounting standard International Financial Reporting Standard (IFRS) 16 Leases. We report three major findings in this paper. First, while the IASB used the Framework concepts to justify new lease accounting requirements, it also used an outside-the-Framework notion to justify a requirement. Second, accommodating constituents’ demands, it introduced rules in IFRS 16 to mitigate their concerns relating to high implementation costs. Third, there are instances where the IASB did not apply appropriate concepts to justify lease accounting requirements. These findings have implications for setting IFRSs.

Keywords: Conceptual Framework, Accounting Standard Setting, Accounting for Leases, IFRS, Principles-Based Standards, Rules-Based Standards

JEL Classification: D71, D72, M41

Suggested Citation

Kabir, Humayun and Rahman, Asheq, How Does the IASB Use the Conceptual Framework in Developing IFRSs? An Examination of the Development of IFRS 16 Leases (August 24, 2018). Journal of Financial Reporting In-Press. DOI.org/10.2308/jfir-52232, Available at SSRN: https://ssrn.com/abstract=3237845

Humayun Kabir (Contact Author)

Auckland University of Technology ( email )

AUT City Campus
Private Bag 92006
Auckland, 1142
New Zealand
+64 21 08309355 (Phone)

Asheq Rahman

Auckland University of Technology - Faculty of Business & Law ( email )

3 Wakefield Street
Private Bag 92006
Auckland Central 1020
New Zealand

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