To,
Hans Hoogervorst
IASB Chairman
London, UK
Date: Nov 11, 2017
Dear Sir,
I am writing this report in order to outline one change that I believe needs to be made to the Conceptual Framework. I have attached the report that details the change and the rationale for the change for your kind consideration.
Thanking You,
Sincerely,
Your Name,
Student,
Name of University
Course Name
Introduction
The IASB conceptual framework is a framework of theories prepared by a standard setting body aimed t dealing with practical problems faced by users of financial statements; the characteristics of accounting information; the elements of financial statements and concepts for measuring and reporting the elements such as assets and liabilities (Financial Times 2017). The benefit is that uniform accounting standards can be applied to deal with common accounting problems; have fewer standards to reduce the volume of standards; help accountants and auditors to resolve accounting issues. However one of the issues is the going concern assumption, which does not appear to take into account more serious risks that an enterprise may be associated with such as sustainability risks.
The problem/Change
One of the problems with the conceptual framework is that it does not address the principle of sustainability within its going concern assumption even in the recent Summary of Tentative Decisions related to the framework (IFRS 2017). Therefore it is proposed that the conceptual framework
The conceptual framework is an attempt to provide a metatheoretical structure for financial accounting. SFAC No.3 defines 10 elements of financial statements. It is obviously a resolution of the definitions presented in the discussion mem for the conceptual framework project. Elements are what accounting professionals measure and the attributes is about how to measure. Definitions can be helpful to the financial statements which have been formulated in order to help professionals to specify the qualification are. Also, the definitions must be expressed in the metatheoretical structure.
The field of accounting is constantly evolving. This is true not only for the theory of accounting itself but also the entities that govern its theory and practice. Presently, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are faced with some of the biggest challenges to date. To understand the significance of these two boards, it is necessary to understand their histories, relations between the boards, and the standards that they set. Also how the knowledge of these boards and the field they lead, gained through the masters of science in accountancy
Since 2002, Financial Accounting Standards Board (FASB) and International Accounting Standards Board’s (IASB) have been working toward “convergence” of US General Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). They have made significant progress in efforts to converge critical accounting standards such as those dealing with revenue recognition, financial instruments and leases. Once these projects are complete, the "era" of convergence will be at an end. Nevertheless, the benefits for investors of eventually getting to consistently applied, high-quality, globally accepted accounting
As I have indicated before, however, I believe that the conceptual framework project should be
For example, no requirement with regards to the disclosure of the auditor’s term of office is needed under IAASB, however it is mandatory in PCAOB.
1. Revenue From Contracts With Customers: Narrow-Scope Improvements and Practical Expedients. (2016). Retrieved September 09, 2016, from http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168130444&acceptedDisclaimer=true
This definition is almost identical to that of the Brundtland Report’s view on global sustainability. Many organizations and corporations have since then embedded the Brundtland Report’s concepts of sustainability and sustainable development, whether it’s for genuine care for the world or the desire to increase positive publicity to consumers. But the process of determining and implementing the definition can be tricky as many struggle with twisting around the term with its broad and interpretable definition. Many arguments have surrounded the issue of when a company releases its sustainable development progress to the stakeholders, they will reap many advantages that are not usually associated with releasing this soft of data in an annual financial
The FASB Conceptual Framework consists of four levels of objectives. However, the most important objective for Target is to provide useful financial information about the company that is useful to potential investors and creditors. This would be helpful for them to make decisions about providing resources and funds to the company. These particular decisions between the creditors and investors generally involve buying, selling, or holding equity and debt instruments, along with providing loans and other types of credit (Wahlen 2012). Target’s reports and disclosures are written to be in accordance with the Global Reporting Initiative G4 Guidelines at the “core” level. Target recognizes these reporting standards as the most credible in order
We all know how important the accounting aspect of any business/organization is. It is basically the most important way to manage finances. Without proper accounting for all expenses and finances, a company and/or organization will definitely have a hard time being financially stable. In this paper we will discuss some foundational accounting principles and terminology
Although no one can deny the validity of his idea, we cannot accept it as the ‘correct’ definition of sustainability due to the issues it does not elaborate on. Needless to say, there exists environmental concerns, which some may argue to be the most important issue on our agenda today. Due to the fact that the
Conceptual framework is a theory of accounting prepared by a standard setting body against which practical problems can be tested objectively. In addition the business dictionary states that conceptual framework is a theoretical structure of assumptions, principles and rules that hold together the ideas compromising a broad concept. Other sources state that a conceptual framework can be viewed as a set of interrelated objectives and theoretical principles, which forms a reference for the underlying discipline. On the other hand, financial reporting is the process of producing statements that disclose an organization's financial status to management, investors and the government. Therefore, in financial reporting the framework provides information
Basing on the background that Conceptual Framework (CF) has offered a mixed model of measurement but giving not enough instructions to help the users of financial statements applying this model into their daily business activities; thus, the Discussion Paper (DP) is taken in place under that need, doing a revised job of the CF and offering its readers
It is essential that the information provided in financial statements is readily understandable by users. Users are assumed to have a reasonable knowledge of business and economic activities and accounting, and a willingness to study the information with reasonable diligence. Also information has the quality of relevance when it influences the economic decisions of users by helping them evaluate past present and future events or confirming or correcting the past evaluations. Information is material and it depends on the size of the item or error judge in the particular circumstance of its omission or misstatement. The IASB framework takes the view that materiality is a cut off point whether information is important to the users. If information must be relevant but so unreliable that it could be misleading so the information must be reliable. Information has the quality of reliability when it is free from material error and bias.
Since 2005, the International Accounting Standards Board (IASB) have encouraged countries to adopt a set of accounting standards that is internationally recognised in order to improve transparency between users and providers of financial reports. The understandability and interpretation are also important factors behind the driving forces of implementing such a standard.
International Accounting Standard Board (IASB) is a professional body that develops and approves International Financial Reporting Standards (IFRSs). The IASB is known as an independent and a private sector organizational. IASB was formed to replace the International Accounting Standard Committee. The IASB organization is responsible for all technical matters of the IFRS Foundation that includes ‘full discretion in developing and pursuing its technical agenda, subject to certain consultation requirements with the Trustee and the public, the preparation and issuing of IFRSs (other than interpretations) and exposure drafts, following the due process stipulated in the Constitution, and the approval and issuing of Interpretations developed by