The Conceptual Framework elaborates on the basics of financial reporting and is the foundation on which the International Financial Reporting Standards (IFRS) are built. IFRS is a set of accounting rules and procedures to ensure consistency. Most countries have adopted
IFRS to standardise account...
Class 1 to the conceptual framework for financial reporting
Subjects
conceptual framework
financial accounting a
cf
Written for
Rosebank College
Financial Accounting A (FACT7311)
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Conceptual Framework for Financial Reporting
x objective of general-purpose financial reporting
x qualitative characteristics of useful financial information
x financial statements and the reporting entity
x the elements of financial statements
x recognition and derecognition
x measurement
x presentation and disclosure
x concepts of capital and capital maintenance
Objective of general-purpose financial reporting
x provide financial info
x about the entity
x that is useful to the users *
x in making decisions about providing resources to the entity
* Users (primary) = existing and potential investors, lenders and other providers
of capital
Qualitative characteristics
Fundamental:
x Relevance. Something is relevant if it makes a difference to user’s decision-making,
which will be the case if it has:
• predictive value
• confirmatory value
x Relevance is related to materiality (which is entity specific)
x Faithful representation
• Complete
• Neutral
• Free from error
Enhancing:
x Comparability
x Verifiability
x Timeliness
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