Iasb's Conceptual Framework

Boundless (2015) said that a Conceptual Framework can be defined as a system of concepts and purposes that guide to the creation of a constant set of regulations and standards. Especially in accounting, the rule and standards set by the nature, function and limit of financial accounting and financial statements. IFRS(2015) stated that the purpose of the Conceptual framework is to enhance financial reporting and objective of accounting by offering a more accomplish, clear and updated set of concepts or guidelines. In Conceptual Framework, it will form a basis for define how transactions should be calculated (historical value or market value) and reported in financial report like how they are presented or communicated to internal or external users. To carry out this, the International Accounting Standards Board (IASB) is establishing on the currently existing Conceptual Framework updating it, enhancing it and padding it in the disparity instead of essentially reconsidering all respects of the Conceptual Framework.

In May 2008, the AICPA’s Governing Council designated the International Accounting Standards Board (IASB) as the body authorized to establish international financial accounting and reporting principles under rule 202 and 203 of the AICPA Code of Professional Conduct. Below is an illustrative Independent Auditor’s Report on financial statements issued in conformity with IFRS.

As stated earlier, the IASB arose from specific needs of the accounting industry and the public. As international trade has increased, the need for transnational accounting information has increased as well. This sparked the demand for development of international accounting standards to make financial data between countries more comparable. In 1973, the International Accounting Standards Committee (IASC) was formed to develop these international standards. The standards issued by the IASC, prior to 2001, were called International Accounting Standards (IASs). In 2001, the IASC made the International Accounting Standards Board (IASB) the official international standard-setting body. The standards issued by the IASB are called International Financial Reporting Standards (IFRSs) (Schroeder, Clark, & Cathey, 2011, p. 82-87).

This standard outlines the presentation of financial statements for general purpose financial statements, in order to ensure that there is compariablity between the entities reporting periods as well as between other industries reports. The standard discusses the minimum requirement for reporting content and guidelines for the structure in which it is to be set at. Paragraph 117-124 distiguishes the disclosure of accounting policies in relation to judgement. Management’s judgement made in applying accounting policies that may have effected significant amounts found in financial statements and the financial position. Seen in paragraph 125-133 ‘Sources Of Estimation Uncertainty’, it is vital that entities disclose the key assumptions made regarding future prospects and other uncertain estimates that are used in identifying carrying amounts of assets and liabilities. Along side this, the nature and carrying amount must be disclosed at the reporting date.

On November 18, 2002 the FASB and IASB came together at a meeting in Norwalk, Connecticut to start the wheels in motion for the purpose of establishing a new set of financial standards. The FASB and IASB are committed to create financial standards that will be accepted both domestically and internationally that are of high quality and compatible for financial reporting. At present more than a 100 countries already use the International Financial Reporting Standards. The U.S. at present has not accepted a changed in accounting procedures; therefore, this is going to be a major task for both the FASB and IASB to complete successfully this union. I do believe that the partnership between the FASB and IASB will achieve the goals of creating a common financial reporting set of standards that will be accepted by all.

But there a certain limit of flexibility of this international standards for cover with all the differences accounting standard or accounting practices in between country. The IFRS is to increase the comparability of annual financial reports no matter oversea or domestic. This only can be success when the new set of accounting standard published by IFRS and adopting by country when only the cultural, economics, politics and other factors within the country change (Chen, 2009).

The globalization of markets over the past 50 years has led to the demand for increasingly comparable financial statements across countries. In response to this demand, the International Accounting Standards Board (IASB) was formed with the purpose of developing a set of high quality global accounting standards. Although a majority of developed markets have adopted the international standards, the United States has not. One reason for the delay in adoption is that many of the standards are very similar. However, there are also several key differences between the two. Presently, the United States Financial Accounting Standards Board (FASB) and the IASB have

A Conceptual Framework can be defined as a system of concepts and purposes that guide to the creation of a constant set of regulations and standards. Especially in accounting, the rule and standards set by the nature, function and limit of financial accounting and financial statements. The purpose of the Conceptual framework is to enhance financial reporting and objective of accounting by offering a more accomplish, clear and updated set of concepts or guidelines. In Conceptual Framework, it will form a basis for define how transactions should be calculated (historical value or market value) and reported in financial report like how they are presented or communicated to internal or external users. To carry out this, the International Accounting Standards Board (IASB) is establishing on the currently existing Conceptual Framework updating it, enhancing it and padding it in the disparity instead of essentially reconsidering all respects of the Conceptual Framework. Conceptual Framework helps the International Accounting Standards

International Accounting Standards (IAS) in effect since 2002 and International Board (IASB) together, provides the conceptual framework of financial reporting in the UK, in effect as of 2005. They have been working together to meet International Financial Reporting Standards (IFRS) issued by International Finance Committee (IFC) which have been endorsed by the EU. IFRS uses a principles approach designed to provide flexibility, transparency and comparability allowing a robust system in providing investors with relevant and reliable financial data, Randy, M (2014). In this essay, countries such as China and the US will be used as examples where the impacts, strengths and weaknesses will be analysed by comparing and contrasting their progress. As a result, a judgement will be made of which country has progressed well in converging to the standards and whether benefits can be seen to the country as a whole.

Also, AASB facilitates the provision of financial information about entities to enable investors, analysts, creditors and the entities themselves to make informed decisions about the allocation of resources. Accounting standards are essentially about disclosure and, in many respects, are at the heart of market efficiency. Clearly, while accounting standards assist preparers of financial statements by providing a framework within which to construct the statements, their prime importance is to assist users of the statements to make meaningful assessments about the financial position of an entity. Users of financial statements range from directors to investors, through to credit rating agencies. Effective financial reporting, which is essential to investor confidence, can only be achieved if it is underpinned by relevant and well designed accounting standards. As the detail of financial reporting requirements is increasingly being left by legislation to be filled in by accounting standards, the importance of accounting standards is becoming more important. Accounting standards facilitate both the efficient day-to-day operations of individual business entities and contribute to the efficient operation of capital markets. Australia has influenced international accounting standards well in excess of

In the early 70s, the International Accounting Standards Committee (IASC) was born. The priority of the IASC was to improve comparability of financial statements on an international level. It then changed its name to the International Accounting Standards Board (IASB). The main aim of the IASB is not too dissimilar from the IASC ‘... to develop a single set of high quality,

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.

Since 2007, both the Financial Accounting Standards Board (IASB) and the International Accounting Standards Board (IASB) have been collaborating on a unified project pertaining to the creation of a new accounting standard for insurance contracts. Currently, no international accounting standard exists under the International Financial Reporting Standards (IFRS), as they tend to follow the guidance of U.S. Generally Accepted Accounting Principles (GAAP). However, the standards proposed by both boards differ slightly. In June 2013, the FASB issued an Exposure Draft, Proposed Accounting Standards Update: Insurance Contracts (Topic 834) that strayed slightly from the IASB’s Exposure Draft Insurance Contracts also issued in June 2013. Initially, the FASB introduced a model with a scope including not only insurance entities but also noninsurance entities that issued insurance contracts. Nevertheless, the FASB’s goals in the alternation of insurance accounting have diverged further from its initial convergence efforts with the IASB after the FASB voted in a board meeting on February 19, 2014, to narrow the focus of the insurance contracts project to pertaining solely to insurance entities, which is the same scope as current U.S. GAAP. The FASB was pressured by insurance entities, professional accounting organizations, and other financial statement users to reduce the scope of its exposure draft on insurance accounting or to specify which entities would fall under the control of the

The process itself was rigorous. Its aim was to assess whether the current governance arrangements promoted ‘the primary mission of the International Accounting Standards Board, (IASB), of developing high quality, understandable, enforceable and globally accepted accounting standards, and provide for both the accountability and independence of the IASB’. To achieve this, a series of proposals for governance improvements were published last year, a full consultation period ensued, responses were considered, and roundtables were held around the world.

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).