Conceptual Framework For Financial Reporting

Decent Essays

IFRS: Conceptual Framework for Financial Reporting
Role of the Conceptual Framework
Conceptual Framework sets out agreed concepts that underlie financial reporting objective, qualitative characteristics, element definitions
IASB uses Conceptual Framework to set standards enhances consistency across standards enhances consistency over time as Board members change provides benchmark for judgments
Preparers use Conceptual Framework to develop accounting policies in the absence of specific standard or interpretation
Objective of financial reporting Provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity …show more content…

Exposure Draft is a mandatory step
Unlike a Discussion Paper, an Exposure Draft sets out a specific proposal in the form of a proposed Standard
In development, IASB considers: issues on the basis of staff research and recommendations comments received on any Discussion Paper suggestions made by the IFRS Advisory Council, Consultative groups and accounting standard-setters, and public education sessions
After IASB Ballot, ED is published for public comment
How are Standards Developed?
After resolving issues arising from the Exposure Draft, the IASB considers whether it should expose its revised proposals for public comment
Second Exposure Draft

When the IASB is satisfied that it has reached a conclusion on the issues arising from the Exposure Draft, it instructs the staff to draft the IFRS.
Reasons for updating the Framework
Lack of coverage
Guidance can be unclear
Current aspects are out of date and don’t reflect current thinking

Areas of Deliberation
Reporting Entity
Qualitative Characteristics
Presentation and Disclosure
Reporting Entity
Reporting Entity
Based on the importance of financial statement reporting
Importance of financial statements: used by the public to make investment/lending decision
Financial statement required to be reported to be publicly traded on stock exchanges
IASB and FASB working together
Current IASB Definition
“The IASB’s Framework for the Preparation and

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