Conceptual Framework for Financial Reporting
RELEVANT TO ACCA QUALIFICATION PAPER F7 AND P2
Studying Paper F7 or P2?
Performance objectives 10 and 11 are relevant to this exam
The IASB’s Conceptual Framework for Financial Reporting
I am from England, and here in the UK, unlike most countries, our system of government has no comprehensive written constitution. Many countries do have such constitutions and in these circumstances the laws of the land are shaped and influenced by the constitution. Now while the International
Accounting Standards Board (IASB) is not a country it does have a sort of constitution, in the form of the Conceptual Framework for Financial Reporting
(the Framework), that proves the definitive reference document for the development of accounting standards. The Framework can also be described as a theoretical base, a statement of principles, a philosophy and a map. By setting out the very basic theory of accounting the Framework points the way for the development of new accounting standards. It should be noted that the
Framework is not an accounting standard, and where there is perceived to be a conflict between the Framework and the specific provisions of an accounting standard then the accounting standard prevails.
Before we look at the contents of the Framework, let us continue to put the
Framework into context. It is true to say that the Framework:
•
seeks to ensure that accounting standards have a consistent approach to problem solving and do not represent a series of ad hoc responses that address accounting problems on a piece meal basis
•
assists the IASB in the development of coherent and consistent accounting standards
•
is not a standard, but rather acts as a guide to the preparers of financial statements to enable them to resolve accounting issues that are not addressed directly in a standard
•
is an incredibly important and influential document that helps users understand the purpose of, and limitations of, financial reporting
•
used to be
Studying Paper F7 or P2?
Performance objectives 10 and 11 are relevant to this exam
The IASB’s Conceptual Framework for Financial Reporting
I am from England, and here in the UK, unlike most countries, our system of government has no comprehensive written constitution. Many countries do have such constitutions and in these circumstances the laws of the land are shaped and influenced by the constitution. Now while the International
Accounting Standards Board (IASB) is not a country it does have a sort of constitution, in the form of the Conceptual Framework for Financial Reporting
(the Framework), that proves the definitive reference document for the development of accounting standards. The Framework can also be described as a theoretical base, a statement of principles, a philosophy and a map. By setting out the very basic theory of accounting the Framework points the way for the development of new accounting standards. It should be noted that the
Framework is not an accounting standard, and where there is perceived to be a conflict between the Framework and the specific provisions of an accounting standard then the accounting standard prevails.
Before we look at the contents of the Framework, let us continue to put the
Framework into context. It is true to say that the Framework:
•
seeks to ensure that accounting standards have a consistent approach to problem solving and do not represent a series of ad hoc responses that address accounting problems on a piece meal basis
•
assists the IASB in the development of coherent and consistent accounting standards
•
is not a standard, but rather acts as a guide to the preparers of financial statements to enable them to resolve accounting issues that are not addressed directly in a standard
•
is an incredibly important and influential document that helps users understand the purpose of, and limitations of, financial reporting
•
used to be