Conceptual Framework

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RELEVANT TO ACCA QUALIFICATION PAPER F7 AND PERFORMANCE OBJECTIVES 10 AND 11 The need for and an understanding of a conceptual framework This topic forms most of Section A (and has an influence on Section B) of the syllabus for Paper F7, Financial Reporting. A conceptual framework is important to the understanding of the many principles and concepts that underpin International Financial Reporting Standards (IFRS) and is an often-neglected part of candidates’ studies. Questions from these areas regularly appear in Paper F7 exams – usually as Question 4 – and I often comment in my examiner’s report that they are the least well-answered question in the exam paper; the questions also have a high incidence of candidates not attempting them…show more content…
The Framework is also of value to auditors, and the users of financial statements, and more generally help interested parties to understand the IASB’s approach to the formulation of an accounting standard. The content of the Framework can be summarised as follows: • Identifying the objective of financial statements • The reporting entity (to be issued) • Identifying the parties that use financial statements • The qualitative characteristics that make financial statements useful • The remaining text of the old Framework dealing with elements of financial statements: assets, liabilities equity income and expenses and © 2011 ACCA 3 THE NEED FOR AND AN UNDERSTANDING OF A CONCEPTUAL FRAMEWORK OCTOBER 2011 when they should be recognised and a discussion of measurement issues (for example, historic cost, current cost) and the related concept of capital maintenance. The development of the Framework over the years has led to the IASB producing a body of world-class standards that have the following advantages for those companies that adopt them: • IFRS are widely

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