Can Conceptual Framework Advance The Development Of Accounting Standard?

1525 WordsJan 18, 20167 Pages
Can Conceptual Framework advance the development of accounting standard? International Accounting standard Board (IASB) is ‘responsible for the development of high quality global accounting standards for use in the world’s capital markets and by other users.’ It is the standard-setting body of the International Accounting Standards Committee (IASC) Foundation. It was formed in 2001 to replace IASC. The objectives of IASC foundation are to develop a single set of global financial reporting standard and to encourage the use of those standard. In order to overcome the differences between national accounting practices, a lot of national standards bodies have jointly agreed and adopted a series of International Financial Reporting Standards…show more content…
Generally accepted accounting principles (GAAP) usually outline such standards in their frameworks. The IASB conceptual framework would classify these into fundamental qualitative characteristics and enhancing qualitative characteristics. IASB emphasize the following qualitative characteristics related to usefulness of financial information. There are Relevance, Faithful representation, Comparability, Verifiability, Timeliness and Understandability. Relevance of information is defined in terms of whether the information are relevant to the decision-making needs of users, helping users to assess past, present, and future events, or to confirm or correct their past evaluations. Relevant information must have predictive or confirmatory value. Reliable information is free from material error and bias. Faithful representative means that the information must faithfully and completely reflect the transaction or other company’s financial situation, either claiming to represent or may reasonably be expected to represent. Comparability means information should be presented in an easy way to compare with information about the same businesses for different periods; or easily compared information with different business for the same or different period, to enable users to make significant comparisons. Verifiable means information be tested through observations or estimation which increases representational

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