A voluntary group of academics of Brazilian universities

However, if such a consensual formal definition is not reached, an explanation of the concepts that are embodied on the expression business model should suffice (such as well presented on paragraphs 9.25 through 9.28 on the Discussion Paper).

BNP Paribas

Beyond the concept, the business model is observable through the documented management strategy, risk management, organisation, procedures and processes that reflect the way management use the entity’s resources to generated cash flows and create value.

Colin Haslam, Professor of Accounting and Finance Business and Management School Queen Mary University of London

The IASB should not try to precisely define “business models” but provide a loose broad conceptualisation of business models that is grounded in accounting. Broadly conceptualized a business model contains focal firms that share similar stakeholder relations and information genotype. Rather than reporting “to” stakeholders a business model framework, grounded in accounting, would encourage disclosures “about” relevant stakeholder relations and how these are materially impacting upon reporting entities disclosed financials.

Co-operatives UK

In defining business models, standards setters should consider who are the key stakeholders/owners/beneficiaries of a type of entity, and how their interests are aligned. Since standards have, to date, been drawn up by reference to the “investor driven” model, the IASB should first identify the sectors/models that do not naturally fit this model. It should then positively consult with representatives of these other sectors. This could be by having a formal sub-committee as part of the structures of the IASB or via consultation on a project basis with representatives of the various sectors. Co-operatives UK would be happy to assist in co-ordinating consultation with the various types of co-operatives that form part of the sector. To ignore those organisations that are not solely established to generate a return for their investors brings the risk that the accounting standards become increasingly divorced from the many and varied users of financial accounts..

European Banking Federation

The business model should describe how the entity creates, delivers and captures value, reflecting how the business is managed. For financial services firms the business model will include a broader consideration of the relationship between assets and liabilities, and how these are used to create value.

Financial Reporting Council (FRC) UK

It is not necessary for the Conceptual Framework to define the term “business model”; but we suggest that it provide a general description of it as discussed in paragraph 2.42 above. (2.42). We suggest that it would be appropriate for the Conceptual Framework to provide a general description of the business model, rather than a specific definition. This should emphasise that the business model focuses on the means by which an entity creates value.

Hong Kong Institute of Certified Public Accountants

Some constituents believe the term “intended use” rather than “business model” to be more self-explanatory and resulting in a more robust application to specific assets and liabilities. The term “intended use” is also better able to be used as a guiding principle when there is only one or a very few similar transactions. We would therefore prefer greater use of this term at the standard level, particularly in respect of classification and measurement and would urge caution on the use of the term “business model” in this regard. Guidance on the meaning of “intended use” could refer to the role of a business model in identifying the “intended use” of an asset or liability i.e. when an entity has an established pattern of past practice. In any event, whether “business model” or “intended use” is adopted, we consider it important that the IASB should develop guidance to ensure its consistent application. We therefore urge the IASB to develop a proper rationale as part of the revised Conceptual Framework and demonstrate how it can be applied in recognition, measurement, presentation and disclosure.

Institute of International Finance (IIF)

Definition of the business-model concept is especially important in light of other disclosure mandates that firms

encounter. While the business-model concept could contribute to the overall quality of financial reporting and related disclosures if appropriately defined, the present proposal may actually detract from the ability to present and disclose decision useful information to investors in the context of the actual economic business models that firms have (as opposed to accounting constructs). A business model definition should include, pursuant to Enhanced Disclosure Task Force (EDTF) recommendations (five to eight) on Risk governance and risk management strategies/business model, “a clear and explicit account of how value is created by firms”. We believe that a firm should be able to translate that concept into its financial reporting. Business models should be articulated in such a way as to be clearly understood by users and therefore need to be translated consistently in accounting, regulatory and financial reporting as a whole. Certainly a narrow “business-model” concept used essentially in a technical sense relating only to accounting for financial instruments and not to the actual conduct of business would not help overall understanding and clarity. Therefore, attention needs to be given to making the concept more reflective of actual economic business models. If this is not possible, then, consideration should be given to using another term for accounting purposes, such as “measurement model”, if the accounting definition of the concept remains at odds with the more intuitive concept of “economic business models” used in broader disclosures.

Organismo Italiano di Contabilità (OIC) [Italian Accounting Organisation]

To identify the most appropriate definition of this concept, the IASB could leverage on the most recent developments of the academic research which has been trying to define this concept in a variety of ways.