This essay protrudes the objective of general purpose financial reporting (GPFR) as edged in the conceptual framework. The essay instigated with a brief history and development of conceptual framework which comprises Statement of Accounting Concepts. Apart from that, the essay also clarifies on how the financial information is essential for the users as stated in the SAC 2, for decision making purposes. Additionally, an illustration of the relationship between the SACs and how they are interrelated to fulfil the objective of general purpose reporting is pictured. Introduction
The Conceptual Framework adopts financial reporting as issued by the Financial Accounting Standards Board (FASB) of USA. The standards were placed in practice by the Australian Accounting Research Foundation (AARF) and the Accounting Standards Review Board (ASRB) developed by the Public Sector Accounting Standards Board (PSASB). The main aim was to demarcate the boundaries of financial reporting in that conceptual framework was to deal only with general purpose financial reporting. The ASRB was replaced by Australian Accounting Standards (AASB), and four Statements of Accounting Concepts (SACs) developed in the 1990s. The main function of conceptual framework is to standardise the financial reporting for all business entities. Conceptual Framework
There is no ‘absolute’ definition of a conceptual framework (Deegan 2005). But Financial Accounting Standards Board in the USA defined the framework as a coherent system of interrelated objectives and fundamentals that is expected to lead to consistent standards (Deegan 2005). The structure of Conceptual Framework draws to subsections of elements of accounting standards. (Refer to Appendix I). Nature of general purpose reporting as outlined in the SAC
The rationale of Statement of Accounting Concepts (SACs) is to present a framework for the progression of the Accounting Standards and to provide a universal supervision on how to...