Regulatory and Conceptual Framework
Regulatory and Conceptual Framework
I am going to analyse and evaluate the conceptual and regulatory framework of financial reporting. In order to do this I will look at the objective of financial statements, identify the users of financial statements, explain the conceptual framework for financial reporting, look at the regulatory framework for financial accounting and finally look at the three ways of achieving accounting comparability.
According to IAS Plus website, 2011, the objective of financial statements is;
‘to provide information about the financial position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions’
This objective is what all entities are aiming to achieve when creating their financial statements. There are two types of framework put in place to help the company to achieve this objective. The two types of framework are conceptual framework and regulatory framework. In order for the financial statements to meet their objective they must follow the conceptual framework. Conceptual framework is,
‘not an accounting standard, sets out the principles and concepts that underlie the preparation and presentation of financial statements for external users’ (Gupta. A, p.146, 2008)
Conceptual framework is basically a set of rules on the preparation and presentation off financial statements. The conceptual framework ensures that all financial statements are created correctly and are understandable. They assist many people such as; 1. ‘Preparers in applying accounting standards and in dealing with topics that have yet to form the subject of an accounting standard. 2. Auditors in forming an opinion as to whether financial statements conform to accounting standards, or not. 3. Users in analysing and interpreting the information contained in financial statements prepared in conformity with accounting standards, and 4. The Accounting Standards Board (ASB) of the ICAI in
I am going to analyse and evaluate the conceptual and regulatory framework of financial reporting. In order to do this I will look at the objective of financial statements, identify the users of financial statements, explain the conceptual framework for financial reporting, look at the regulatory framework for financial accounting and finally look at the three ways of achieving accounting comparability.
According to IAS Plus website, 2011, the objective of financial statements is;
‘to provide information about the financial position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions’
This objective is what all entities are aiming to achieve when creating their financial statements. There are two types of framework put in place to help the company to achieve this objective. The two types of framework are conceptual framework and regulatory framework. In order for the financial statements to meet their objective they must follow the conceptual framework. Conceptual framework is,
‘not an accounting standard, sets out the principles and concepts that underlie the preparation and presentation of financial statements for external users’ (Gupta. A, p.146, 2008)
Conceptual framework is basically a set of rules on the preparation and presentation off financial statements. The conceptual framework ensures that all financial statements are created correctly and are understandable. They assist many people such as; 1. ‘Preparers in applying accounting standards and in dealing with topics that have yet to form the subject of an accounting standard. 2. Auditors in forming an opinion as to whether financial statements conform to accounting standards, or not. 3. Users in analysing and interpreting the information contained in financial statements prepared in conformity with accounting standards, and 4. The Accounting Standards Board (ASB) of the ICAI in
References: Alexander. D, Britton. A, Orissen. A, 2007, International Financial Reporting and Analysis, Third Edition Frederick Gupta. A, 2008, p. 146, Financial Accounting for Management: An Analytical Perspective, Third Edition IAS Plus, 2011, History of IAS 1, [online] http://www.iasplus.com/standard/ias01.htm [Date Accessed: 18/12/2011] IASB, 2009, p.85, International Financial Reporting Standards Kaplan, 2011, p.145, Paper F7: Financial Reporting, Complete text Hussey. R, Ong. A, 2005, International Financial Reporting Standards Desk Reference: Overview, Guide and Dictionary