Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

CHAPTER 2

IASB FRAMEWORK FOR THE PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS

1. OBJECTIVE

1.1 The International Accounting Standards Board (IASB) Framework for the Preparation and Presentation of Financial Statements (the Framework), also referred to as the “conceptual framework” in some jurisdictions, sets out the concepts that underlie the preparation and presentation of financial statements (i.e., the objectives, assumptions, characteristics, definitions, and criteria that govern financial reporting).

1.2 The Framework is not a Standard nor does it have the force of a Standard. It serves as a guide in developing new and revised Standards. In case of a conflict between the IASB Framework and a specific IASB Standard, the Standard prevails over the Framework.

2. SYNOPSIS OF THE IASB FRAMEWORK

This summary of the Framework sets out the concepts that underlie the preparation and presentation of financial statements for external users.

2.1 The Framework addresses

• The objective of financial statements
• Underlying assumptions
• Qualitative characteristics that determine the usefulness of information in financial statements
• The definition, recognition, and measurement of the elements from which financial statements are constructed
• Concepts of capital and capital maintenance

2.2 The objective of financial statements is to provide information about the financial position, performance, and changes in financial position of an entity that is useful to a wide range of users in making ...