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Conceptual Framework Of The International Accounting Standards Board Essay

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The Conceptual Framework
The conceptual Framework of the International Accounting Standards Board (IASB) was issued in 1989 by the International Accounting Standards Committee (IASC) to provide a theoretical and non-arbitrary structure to guide the development of accounting standards. The Conceptual Framework was defined by the Financial Accounting Standards Board (FASB) as a ‘coherent system of interrelated objectives and fundamentals that are expected to lead to consistent standards and that prescribe the nature, function, and limits of financial accounting and reporting ’ (Godfrey, Hodgson, Tarca, Hamilton, & Holmes, 2010, p. 94).
The Framework aims to assist in producing a body of standards that is more internally consistent than the informal approach thereby enhancing the credibility of accounting information. In the framework the following elements are found (Lal, 2008):
a. At the first level, the objectives identify the goals and purpose of accounting.
b. At the second level, the fundamentals include the qualitative characteristics of accounting information and the definitions of the elements of financial statements.
c. At the third level, the operational guidelines that the accountants use in establishing and applying accounting standards include the recognition, measurement and recognition concept.
First Level: Its highest theoretical levels
The objectives of financial reporting are that it should provide information about the financial position, performance
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