• Hristina Oreshkova Faculty of Finance and Accounting, University of National and World Economy, Sofia, Bulgaria
Keywords: Financial reporting, prudence, conservatism, neutrality, hidden reserves, deliberate bias, transparency


In support of the critical analysis targeted at substantiating the necessity of reintroducing “prudence” in the Conceptual Framework for Financial Reporting (CF), that is the primary author’s goal, the article provides further results as well as views and arguments, based on research, provoked by the International Accounting Standards Board’s decision to revise the CF (in September 2010) and remove “prudence” in favour of “neutrality” regarded as a qualitative characteristic. The author’s aim is not to discuss the role of the CF as a whole, or its objectives, but to contribute to the current debate on a complicated and highly controversial issue, raised in the Discussion Paper (DP), followed (in January 2014 and May 2015) by the Exposure Draft (ED) containing proposals for a revised CF.The thesis held by the author, both before and now, is that for a considerable number of reasons it is imperative to restore “prudence” in the CF, subjected to revision at the moment (and yet expected) as an introduction to thnternational Accounting Standards (IAS)/International Financial Reporting Standards (IFRS), with a clearly defined content of its definition in order to avoid misinterpretation or misunderstanding, which, in my view, will not impair “neutrality”, but will support it.
On the basis of my long-lasting research alongside the thorough observation of the regulatory process, I would argue that as a supranational body, developing the accounting norms for many business entities operating in the EU and elsewhere, the EU accounting standards setter, who is responsible for the ambiguities or at least misconception, due to its prerogatives, has not been consistent in its policy with regard to prudence over the years. Probably one major reason is the influence of political, institutional and other factors in the global process of convergence. The development and deliberations as of December 2016 and January and February 2017 as to the revision of the CF have convincingly confirmed that once more.


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