Conceptual Framework

Introduction3

IASB3

IFRS3

The Conceptual Framework3

Discussion4

Conceptual Framework and Users4

Conceptual Framework and Qualitative Characteristics of Financial Reporting5

Corporate Financial Reports and Central Objective of Financial Reporting6

Conclusion9

References10

Conceptual Framework

Introduction

IASB

IASB stands for International Accounting Standards Board. It is a self-governing standard (accounting) setting body. Formed in 2001 (April), it has since been responsible for the development of international 'financial' reporting standards (also known as IFRS), as well as, for the promotion of application and usage of the standards. Its Handbook illustrates the counseling arrangements of the IASB. In addition to this it an independent body for developing and setting standards of the IFRS foundation. Currently there are fifteen members of IASB who are designated to develop and publish IFRS standards. These IFRS includes for interpretation committee which was formerly known as IIFRIC and for SMEs. Meetings held by IASB are public and webcast. To comply with standard setting responsibilities, IASB follows transparent and open procedures and is done with the exposure drafts and discussion paper and public reaction is also a vital factor for this and it is to mention here that IASB closely involves all the stakeholders from the world (IFRS, 2013).

IFRS

IFRS stands for the International Financial Reporting Standard; the IFRS foundation focuses mainly on developing and promoting the reporting standards using IASB as the dispersal medium (Ball, 2006). Formed in 1973 (June) as the International Accounting Standards Committee (IASC), it was renamed in 2010 (July), its main activities are setting the standards and development of the IFRS Taxonomy (which provides a general electronic format for business as well as financial reporting - XBRL). It is non-profit private body working for the interest of public. Main objectives of IFRS includes; developing best quality and globally accepted and understandable IFRSs through it standard setting and developing board IASB, promotion and implementation of IFRSs, understanding the reporting needs of emerging economies and SMEs, and facilitate and promote IFRSs for adoption by businesses and economies (IFRS, 2013).

The Conceptual Framework

The conceptual framework is used, in the development of IFRSs, by the IASB. It aims to update and improve the existing concepts to show the changes in business practices, markets and the economic scenario. It sets out the concepts which are necessary for the preparation as well as presentation of the financial statements. It deals with the objectives and qualitative characteristics of financial reporting/information as well as concepts of capital and its maintenance (Whittington, 2008).

Discussion

Conceptual Framework and Users

Users refer to those persons who are supposed to use the financial reports in order to make future decisions based on the financial reports. The objective of financial reporting, according to the conceptual framework's perspective, is to give financial information to the users about the entity being reported. The users include lenders, current and potential investors, and other creditors who find the financial information useful for making decisions as to providing the entity with resources (Tuttle et al, 2002). These decisions comprise of selling, buying or holding stocks, bonds or debentures and provision or settlement of loans and other ...