EU standards bodies defend ‘stewardship’
Despite international disagreement over its significance, EU standards-setters issue a paper defending concept of ‘stewardship’ in financial reporting
EU standards-setters have issued a paper strongly defending the concept of
‘stewardship’ in financial reporting amidst international disagreement over its
significance.
The issue has divided US and European standards-setters. Where US reporting
focuses on forward cashflow statements, EU reporting has used stewardship to
emphasise management’s record as a way of recording the position of a company.
The European Financial Reporting Advisory Group (EFRAG), the Accounting
Standards Board (ASB) and a number of other European accounting standard-setters
published a paper this week discussing the inclusion of stewardship as a
separate objective of financial reporting.
The report said there was a consensus amongst stakeholders that it should be
an objective of reporting, that it is a broader concept than the US idea of
‘resource allocation’.
Although a majority of the IASB and FASB respondents were in favour of
identifying stewardship as a separate objective of financial reporting, there
were doubts about different interpretations.
IASB chairman Sir David Tweedie had earlier voted against the downgrading of
the concept, but was overwhelmingly outvoted.
