Ethics and Conceptual Framework Paper

Topics: Decision making, Ethics, Financial Accounting Standards Board Pages: 4 (1333 words) Published: May 15, 2011
Ethics and Conceptual Framework Paper
Conceptual Framework
There are two major philosophies in accounting consisting of a principles-based system for accounting and a rules-based system for accounting. The following discussion will speak about these two philosophies and will define one as being a best fit for encompassing the role of ethics and the conceptual framework. The conceptual framework was established by the Financial Accounting Standards Board (FASB) and is used to help define the boundaries of accounting. It gives definitions of key terms and establishes consistent standards by which fundamental issues are defined. This makes it easier to facilitate discussion and leads to greater efficiency in making accounting judgments. The framework plays a major role in supporting the development of accounting standards used for neutral information, which is then used to make informed investment decisions, benefiting the public. The goal is to reduce the influence of personal biases and to give a fair judgment or ruling. This unbiased information can be used knowing that the best intentions of the public were being considered. This in turn should result in higher credibility and allow a more-informed judgment to be made. Another role of the framework is to provide an overall standard that can be discussed and debated and give appropriate guidelines so a scenario can be discussed adequately with appropriate pros and cons. This creates an atmosphere where a scenario can be clearly defined and a decision can be reached on the specific purpose of the intended rules and desired results (Foster, 2001). The Role and Ethics of Decision Making

The conceptual framework is just one small yet pertinent piece of an overall game plan that aids in defining moral and legal actions that should be taken when making any type of financial decision. There are always professional judgments and decisions to be made, but the difficult part is that they are constantly changing because...
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