The Conceptual Framework Of Financial Reporting By Providing A More Complete, Clear And Update Set Of Concepts

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Introduction “The Objective of the Conceptual framework project is to improve financial reporting by providing a more complete, clear and update set of concepts” (IFRS.org). Although the current framework has been crucial in to the IASB when developing and revising IFRS’s there have been a few problems. There are areas that are uncovered, limited guidance and out of date areas. In July 2013 the IASB issued a discussion paper which is designed to explore potential changes to the IASB’c conceptual framework and the possibility of a revised framework. “The Conceptual Framework sets out the concepts that underlie the preparation and presentation of financial statements“ (JULY 2013). This discussion document is the first step to a revised…show more content…
The reference to expected flow of economic benefits causes confusion between the resource and obligation itself and the inflow or outflows of economic benefits. There are two arguments that the Discussion Paper 2013 addresses. The first is that the expected part of the definition implies that there is some sort of level of probability required. This can lead to unfaithful representations in practice due to assets and liabilities possibly not being recognised and reported in full. The recognition criteria and guidance sheds light on this dilemma. The second argument was that the explicit reference to the flows of economic benefits blurs the distinction between resource and obligation and the resulting flows of economic benefits. The new definition is more specific and allows users to interpret the definition and identify assets easier. The reference to economic benefits has been moved to the new definition of economic resource. DP 2013 states this “makes the definition more concise and focused and shows coherently the parallel between the definition of an asset and liability”(DP 2013). The discussion document states that it will add the term ‘present’ to the asset definition and retain it in liability in order to show that the their should be control or obligation by reporting date and to emphasis the parallel between asset and liability. The phrase ‘as a result of past events’ will also be retained. This is to
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