The International Accounting Standards Board

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This report will address the main features of the International Accounting Standards Board’s (IASB) Conceptual Framework (CF) by explaining the purpose and intent of these standards together with the structure of the framework. The important features of these standards will be highlighted, analysing of the significance of these and ultimately whether the CF has impacted on accounting practice.

Elliot and Elliot (2012, p.238) highlight the increasing need for a consistent framework due to ‘the growth of the global economy there has been a corresponding growth in the need for global standards so that investors around the world receive the same fair view of a company’s results’. Emphasising the need for the basic concepts,
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If preparers of financial statements follow the CF, it is hoped the ease of comparability between different entities will result in individual users being able to make well-informed economic decisions.

There are numerous purposes stated in the CF. The main purpose being to give guidance for accounting standard-setters, the IFRS, to review existing standards and to develop new ones. The CF gives a coherent and consistent foundation to underpin the development of new accounting standards (ACCA, 2014).

A further purpose and also one of high importance, is to align the accounting standards to promote harmonisation of regulations. The aim is to reduce the alternative accounting treatments whilst preparing financial statements (IASB, 2010).

Further purposes of the CF are to assist both the preparers of financial statements in applying the IFRS and assisting auditors on providing an opinion on an entity after evaluating whether the financial statements comply with the IFRS.
The structure of the CF and the significance of its important features:

The structure of the CF is outlined in the diagram below. The significance of the important features within this will then be discussed.

Source: (Kieso, Weygandt and Warfield, 2011, p.8)

The CF is divided up into an introduction and a further 4 chapters. Each chapter covers a different underlying concept to financial statement reporting, all of which have been outlined below. Following the main
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