The International Accounting Standards Board

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The conceptual framework was issued by the International Accounting Standards Board (IASB) in 2010, and is define as a group of ideas or principles used to plan or decide something. It can be seen as a set of guiding principles – that is, those ideas or concepts that influence and direct decisions being made in a particular area (Rankin et al, 2012). When preparing financial statements there are issues that need to be taken into account. The Framework was designed to provide resolutions to these issues. The IASB and FASB began a project in 2004, to design a common conceptual framework. The project is made up of 8 phases: objectives and qualitative characteristics; elements and recognition; measurement; reporting entity; presentation and…show more content…
The Conceptual Framework principles’ intend to offer guidance, however, since the principles in the Framework are such general concepts, the guidance applies to a wide range of decisions relating to the preparation of financial statements. On the other hand, not like the Framework, Accounting Standards provide specified requirements for a specific area of financial reporting. Accounting Standards can provide specified requirements for a particular area because the standards are associated with a much narrower financial reporting area that can include far more detail. The inclusion of this added detail riddles out the likelihood of different interpretations. With Accounting Standards including far more detail than then Framework, it is able to go beyond areas that the Framework has considered. A further inconsistency is that when dealing the Accounting Standards they must be complied with, whereas the principles in the Framework are not necessarily compulsory. If however, the principles in the Framework clash with a requirement of an Accounting Standard, then the requirement in the Accounting Standard has to be adhered to. These inconsistencies are likely to occur due to the fact that the conceptual framework is incomplete. With the Framework remaining incomplete, inconsistencies such as measurement remain unsolved. 3. Discuss why measurement is so important in accounting and explain the
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