BC11 The exposure draft of 2006 proposed a change to the explanatory paragraph of what ‘general purpose financial statements’ include, in order to produce a more generic definition of a set of financial statements. Paragraph 7 of the exposure draft stated:

General purpose financial statements include those that are presented separately or within other public documents such as a regulatory filing or report to shareholders. [emphasis added]

BC12 Respondents expressed concern about the proposed change. They argued that it could be understood as defining as general purpose financial statements any financial statement or set of financial statements filed with a regulator and could capture documents other than annual reports and prospectuses. They saw this change as expanding the scope of IAS 1 to documents that previously would not have contained all of the disclosures required by IAS 1. Respondents pointed out that the change would particularly affect some entities (such as small private companies and subsidiaries of public companies with no external users of financial reports) that are required by law to place their financial statements on a public file.

BC13 The Board acknowledged that in some countries the law requires entities, whether public or private, to report to regulatory authorities and include information in those reports that could be beyond the scope of IAS 1. Because the Board did not intend to extend the definition of general purpose financial statements, it decided to eliminate the explanatory paragraph of what ‘general purpose financial statements’ include, while retaining the definition of ‘general purpose financial statements’.