Iasb's Conceptual Framework
A Report on the Significance of the IASB’s Conceptual Framework and the Exposure Draft ‘Conceptual Framework for Financial Reporting – The Reporting Entity’
Introduction
This report is intended to discuss the significance of the IASB’s Conceptual Framework. It will layout the basis of the Conceptual Framework and then discuss its significance and relevance with regards to previous and future accounting industry standards.
Findings
The IASB’s (International Accounting Standards Board) Conceptual Framework is a set of rules and standards that the accountancy industry, within the Global market, adheres to in order to produce clarity across the board when producing financial statements and information for users of those statements.
IASB will replace the standards set by the FASB (Financial Accounting Standards Board) in which the UK accountancy industry required companies to comply with generally accepted accounting practice (GAAP). GAAP offers a certain amount of legal backing to the accounting standards produced by the FASB, however problems occurred when direct comparisons were made between the financial statements of companies from different countries using a variety of methods.
This difficulties arose as a result of these countries using different reporting standards to those set by the FASB. This problem was not just between UK and other countries, but also between financial statements produced in any differing countries. As such, like for like comparisons between entities based in different countries was time consuming and complicated.
The accounting standards with the biggest international widespread use, before the change in reporting, was the United States (US) GAAP (generally accepted accounting practice), as at the time this was mandatory reporting for all American companies and all foreign companies wishing to be listed on the American stock exchange.
However, because of the international differences in reporting, this lead to a
Introduction
This report is intended to discuss the significance of the IASB’s Conceptual Framework. It will layout the basis of the Conceptual Framework and then discuss its significance and relevance with regards to previous and future accounting industry standards.
Findings
The IASB’s (International Accounting Standards Board) Conceptual Framework is a set of rules and standards that the accountancy industry, within the Global market, adheres to in order to produce clarity across the board when producing financial statements and information for users of those statements.
IASB will replace the standards set by the FASB (Financial Accounting Standards Board) in which the UK accountancy industry required companies to comply with generally accepted accounting practice (GAAP). GAAP offers a certain amount of legal backing to the accounting standards produced by the FASB, however problems occurred when direct comparisons were made between the financial statements of companies from different countries using a variety of methods.
This difficulties arose as a result of these countries using different reporting standards to those set by the FASB. This problem was not just between UK and other countries, but also between financial statements produced in any differing countries. As such, like for like comparisons between entities based in different countries was time consuming and complicated.
The accounting standards with the biggest international widespread use, before the change in reporting, was the United States (US) GAAP (generally accepted accounting practice), as at the time this was mandatory reporting for all American companies and all foreign companies wishing to be listed on the American stock exchange.
However, because of the international differences in reporting, this lead to a