The Conceptual Framework For Financial Reporting

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The IASB has published an Exposure Draft (“the ED”) ED/2015/3 in May 2015 containing proposal for the areas in which it considers a revision of the Conceptual Framework is necessary. The main purpose is to make significant improvements to the conceptual framework without more delay and expects to complete the revision to the conceptual framework in 2016. To attain this IASB updating the existing Conceptual Framework, by improving it and fill the gaps instead of reconsidering all parts of the Conceptual Framework.

A conceptual framework can be considered as a normative accounting theory. Relying on the various assumptions about the types or associates with the information useful for decision making. It directs in interest of what
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(b) IASB to develop consistent accounting policies when no Standard applies to a particular transaction or event, and
(b) Others to help them understand and apply those standards.
The existing Conceptual Framework of IASB’s was developed by its predecessor body IASC (International Accounting Standards Committee) in 1989. The material on the objective of financial reporting was first revised by the IASB in 2010 with the US national standard-setter, the Financial Accounting Standards Board (FASB). This ED sets out the proposal for a revised Conceptual framework. It has been developed on the behalf of responses received on (‘the Discussion Paper) which was published in July 2013. (IFRS, May 2015)

Reasons or Issues why IASB revising the Conceptual Framework: -
 Fill gaps: there are gaps in the existing conceptual framework. For example it provides little guidance on presentation and disclosure of financial information.
 Clarify: in some areas guidance is unclear and less helpful than it could be. For example, how to measure assets, liabilities, income and expenses.
 Update: existing conceptual framework are out of date in some aspects. For example the existing guidance on when assets and liabilities should be recognized.

What is new in the Conceptual Framework ED/2015/3?
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