Regulatory Framework

chapter 1

Conceptual and regulatory framework Contents
Introduction
Examination context
Topic List
1

Financial statements

2

Purpose and use of financial statements

3

Bases of accounting

4

The IASB Framework

5

International Accounting Standards Committee
Foundation (IASCF)

6

International Financial Reporting Standards (IFRS)

7

Inherent limitations of financial statements

8

Not-for-profit entities

Summary and Self-test
Technical reference
Answers to Self-test
Answers to Interactive questions

1

F inancial accounting

Introduction

Learning objectives

Tick off

Explain the nature of financial reporting
Explain the objectives of financial statements
Discuss the conceptual and regulatory framework affecting the preparation of financial statements Discuss the importance of the IASB Framework
Apply the principles of the IASB Framework, including the qualitative characteristics of financial information, the elements of financial statements, recognition and measurement of the elements Explain and demonstrate the differences between financial statements produced using:
–

The accrual basis

–

Cash accounting

–

The break-up basis

Explain and illustrate the different definitions of capital and capital maintenance
Explain the regulatory framework affecting not-for-profit entities
Specific syllabus references for this chapter are: 1a, b, c, d, e, f, 2e.

Practical significance
The way that items and transactions are treated and presented in the financial statements may affect an investor's perception of the position and performance of an entity. Whilst individual accounting standards can be developed to deal with specific issues it is also important that there is a framework that sets out the wider purposes that accounting standards are intended to achieve. This helps to ensure that standards are consistent and not overly affected by political influence or self-interest