P2 Ias
Frameworks: Frameworks are boundaries for accountant and made up by PRINCIPLE and RULES. There are Two types of framework –
1. Conceptual: Conceptual are made up by historical practice that are done by people like- IAS, GAAP etc.
2. Regulatory: Regulatory are boundaries of rules and regulation like- Company law, National standards of accounting, Stock exchange regulation, Sometimes IAS if country adopt it etc.
Usefulness and Requirement of Frameworks:
1. Framework develops over hundred years. These are the principles of established accounting practices. Framework is the fundamental basic of accounting. It provides core guidance to accountant. Core principles of accounting are almost same and acceptable in most of the countries. So, it harmonized accounting practices over the world.
2. Framework worked as a basis of developing IAS. Most common, established practices are converted in to IAS, IFRS.
3. Framework works as a basis of national standards.
4. Framework identifies reporting entities which should prepared financial statements. Frameworks identify common elements of financial statements and gave recognition criteria of these elements (Assets, Liability, Income, Expense, Capital- means owner proportion of assets of the company).
5. Framework provides guidelines to accountants about treatment of items, where IAS is silent or confusing.
6. Framework helps accountants to understand IAS. Framework also helps users to interpret accountants. Framework also helps auditor to understand whether a treatment is correct or not.
7. Framework provides the qualitative characteristics of preparing and presenting financial statements. These qualities and acceptable in all the countries it gives frameworks widen scope to classify acceptable practices and not acceptable practices.
Procedures to set up an IAS or IFRS: IASB is responsible for introducing, drafting of IAS and IFRS. SAC always collect public comment and advice IASB. IASB set up a team for amendment
1. Conceptual: Conceptual are made up by historical practice that are done by people like- IAS, GAAP etc.
2. Regulatory: Regulatory are boundaries of rules and regulation like- Company law, National standards of accounting, Stock exchange regulation, Sometimes IAS if country adopt it etc.
Usefulness and Requirement of Frameworks:
1. Framework develops over hundred years. These are the principles of established accounting practices. Framework is the fundamental basic of accounting. It provides core guidance to accountant. Core principles of accounting are almost same and acceptable in most of the countries. So, it harmonized accounting practices over the world.
2. Framework worked as a basis of developing IAS. Most common, established practices are converted in to IAS, IFRS.
3. Framework works as a basis of national standards.
4. Framework identifies reporting entities which should prepared financial statements. Frameworks identify common elements of financial statements and gave recognition criteria of these elements (Assets, Liability, Income, Expense, Capital- means owner proportion of assets of the company).
5. Framework provides guidelines to accountants about treatment of items, where IAS is silent or confusing.
6. Framework helps accountants to understand IAS. Framework also helps users to interpret accountants. Framework also helps auditor to understand whether a treatment is correct or not.
7. Framework provides the qualitative characteristics of preparing and presenting financial statements. These qualities and acceptable in all the countries it gives frameworks widen scope to classify acceptable practices and not acceptable practices.
Procedures to set up an IAS or IFRS: IASB is responsible for introducing, drafting of IAS and IFRS. SAC always collect public comment and advice IASB. IASB set up a team for amendment