Accounting and Auditing Research and Databases: Practitioner's Desk Reference

The IASB's Conceptual Framework

The IASB's Conceptual Framework (the Framework) establishes objectives and concepts for the development of accounting standards. The Framework is also useful in the preparation of financial statements by listing the objectives and the qualitative characteristics of the financial statements and providing the definition and measurement concepts of the elements of financial statements and capital maintenance.

Ideally, the Board uses the Framework in the development of future standards. The Framework should also assist users and preparers in applying and interpreting standards and financial statements. For instance, preparers may need to look to the Framework in the absence of a published standard, and auditors may want to ensure clients’ financial statements are in compliance with IFRS to form an opinion on those statements. However, occasionally a conflict arises between the Framework and previously issued IASs or IFRSs. In conflict situations, the standards override the Framework.

The Framework is to provide information regarding the objectives of financial reporting, the qualitative characteristics of financial reporting, the definition, recognition, and measurement of the elements of financial statements, and the concepts of capital and capital maintenance. It does this through four chapters: 1. The Objectives of General Purpose Financial Reporting, 2. The Reporting Entity (yet to be added), 3. Qualitative Characteristics of Useful Financial Information ...