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Far.101.Conceptual Framework Notes

The Conceptual Framework provides guidance for the International Accounting Standards Board in developing accounting standards and in reviewing existing standards. It aims to help preparers apply IFRSs and help users interpret financial statements. However, it does not override specific IFRS requirements. The Conceptual Framework addresses the objective of financial reporting, qualitative characteristics of useful information, elements used to prepare financial statements, and capital maintenance concepts. The objective is to provide users with information useful for deciding whether to invest in or lend to an entity.

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104 views1 page

Far.101.Conceptual Framework Notes

The Conceptual Framework provides guidance for the International Accounting Standards Board in developing accounting standards and in reviewing existing standards. It aims to help preparers apply IFRSs and help users interpret financial statements. However, it does not override specific IFRS requirements. The Conceptual Framework addresses the objective of financial reporting, qualitative characteristics of useful information, elements used to prepare financial statements, and capital maintenance concepts. The objective is to provide users with information useful for deciding whether to invest in or lend to an entity.

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memejane
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CONCEPTUAL FRAMEWORK

1.0 Purpose and Status

1.1 The purpose of the Conceptual Framework is:


a) to assist the Board in the development of future IFRSs and in its review of existing IFRSs;
b) to assist the Board in promoting harmonization of regulations, accounting standards and procedures relating to
the presentation of financial statements by providing a basis for reducing the number of alternative accounting
treatments permitted by IFRSs;
c) to assist national standard-setting bodies in developing national standards;
d) to assist preparers of financial statements in applying IFRSs and in dealing with topics that have yet to form the
subject of an IFRS;
e) to assist auditors in forming an opinion on whether financial statements comply with IFRSs;
f) to assist users of financial statements in interpreting the information contained in financial statements prepared
in compliance with IFRSs; and
g) to provide those who are interested in the work of the IASB with information about its approach to the
formulation of IFRSs.

1.2 Status:
The Conceptual Framework is not an IFRS and hence does not define standards for any particular measurement or
disclosure issue. Nothing in the Conceptual Framework overrides any specific IFRS.

The Board recognizes that in a limited number of cases there may be a conflict between the Conceptual Framework
and an IFRS. In those cases where there is a conflict, the requirements of the IFRS prevail over those of the
Conceptual Framework. As, however, the Board will be guided by the Conceptual Framework in the development of
future IFRSs and in its review of existing IFRSs, the number of cases of conflict between the Conceptual Framework
and IFRSs will diminish through time.

2.0 Scope
The Conceptual Framework deals with:
a) the objective of financial reporting;
b) the qualitative characteristics of useful financial information;
c) the definition, recognition and measurement of the elements from which financial statements are constructed; and
d) concepts of capital and capital maintenance.

3.0 Key Concepts


3.1 The objective of financial reporting
 The objective of general purpose financial reporting forms the foundation of the Conceptual Framework.
 The objective of general purpose financial reporting1 is to provide financial information about the reporting
entity that is useful to existing and potential investors, lenders and other creditors in making decisions about
providing resources to the entity.

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