Conceptual Framework For Financial Reporting

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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 Reasons for updating the Framework Lack of coverage Guidance can be unclear Current aspects are out of date and don’t reflect current thinking Areas of Deliberation Reporting Entity Recognition/Derecognition Elements Qualitative Characteristics Measurement 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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