An Executive Guide to IFRS: Content, Costs and Benefits to Business

Appendix: The IASB Conceptual Framework

As has been touched on in the chapter on presentation, the IASB has a Conceptual Framework, The Framework for Preparation and Presentation of Financial Statements. The original was passed in 1989 and it is, like all other anglophone conceptual frameworks for accounting, based on the US model. There is one significant difference in the status of the two documents. The FASB concepts statements were explicitly drawn up to guide the formulation of standards, and are for the use of standard-setters only.

In terms of the politics of US standard-setting, a criticism made of the FASB’s predecessor was that standards did not have any unifying logic and standard-setters were thought to make pragmatic decisions based potentially on private interests. The conceptual framework was intended to provide a structure for decisions. The FASB conceptual framework does not constitute authoritative literature for preparers and auditors.

The IASB framework, however, issued a decade later in a different context, acknowledges the need for a structure but also uses it to inform the choice of accounting policies by preparers. Gilbert Gélard, a member of the IASB from 2001 to 2010, points out that IFRS must provide standards that are not jurisdiction-specific and are more principles-based. In these circumstances it is necessary to provide guidance to companies as how to interpret the standards to fit specific circumstances.

In 2004 the IASB embarked on a joint programme ...