Conceptual framework

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A conceptual framework is a statement of theoretical principles that provides guidance for financial accounting and reporting. (Collins & Hussey, 2007). It therefore prescribes the nature, function and limits of financial accounting and financial statements.
The IASB's Framework for the preparation and presentation of financial statements sets out the concepts that underlie the preparation and presentation of financial statements that external users are likely to rely on when making economic decisions about an enterprise
The purpose of the framework is to assist the various bodies and users that may be interested in financial statements of an entity. It is there to assist the IASB itself, other standard setters, preparers, auditors and users of financial statements and any other party interested in the work of the IASB. More specifically:
To assist the board in the development of new and the review of existing standards. It is also believed that the framework will assist in promoting harmonisation of the preparation of financial statements and also reduce the number of alternative accounting treatments permitted by IFRSs
National standard setters that have expressed a desire for local standards to be compliant with IFRS will be assisted by the Framework
The framework will help prepares to apply IFRS more effectively if they understand the concepts underlying the standards; additionally the Framework should help in dealing with new or emerging issues which are, as yet, not covered by IFRS
The above is also true of the work of the auditor; in particular the framework can assist the auditor in determining whether the financial statements conform to IFRS
Users should be assisted by framework in interpreting the performance of entities that have complied with IFRS
It is important to realise that the framework is not itself an accounting standard and thus cannot override a requirement of a specific standard. There may be rare occasions were a particular IFRS is

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