Conceptual Framework For Financial Reporting

1512 Words Mar 7th, 2015 7 Pages
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

Objective of financial reporting
Investors’, lenders’ and other creditors’ expectations about returns depend on their assessment of the amount, timing and uncertainty of future net cash inflows to the entity.
Decisions by investors about buying, selling or holding equity and debt instruments
Decisions by lenders about providing or settling loans and other forms of credit
Objective of financial reporting

To assess predictions for future net cash inflows, investors, lenders and creditors need information about: the resources of the entity; claims against the entity; and how efficiently and effectively the entity 's management and Board are using the company’s recourses

Pervasive constraint
Reporting financial information imposes…
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