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B - Conceptual Framework Overview

The document provides an overview of the conceptual framework and its purpose in accounting standards. The conceptual framework is an analytical tool that visually explains key concepts and relationships to provide consistency in accounting rules and financial reporting. It serves as the theoretical foundation for standards and helps preparers develop accounting policies when no standard applies.

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Karyl Failma
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8 views

B - Conceptual Framework Overview

The document provides an overview of the conceptual framework and its purpose in accounting standards. The conceptual framework is an analytical tool that visually explains key concepts and relationships to provide consistency in accounting rules and financial reporting. It serves as the theoretical foundation for standards and helps preparers develop accounting policies when no standard applies.

Uploaded by

Karyl Failma
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Conceptual Framework Overview

Conceptual Framework and Accounting Standards

 Conceptual Framework
 An analytical tool that is used to get a comprehensive understanding of a phenomenon
which can be used in different fields of work and is most commonly used to visually
explain the key concepts or variables and the relationships between them that need to
be studied
o It can be applied in different categories of work where an overall picture is
needed.
o It is used to make conceptual distinctions and organize ideas.
 A visual representation that helps to illustrate the expected relationship between cause
and effect in a financial context.
 Is a body of concepts, terms and assumptions that set out the concepts that underlie
the preparation and presentation of financial statements for external users
 A system of ideas and objectives that lead to the creation of a consistent set of rules
and standards. Specifically in accounting, the rule and standards set the nature,
functions and limits of financial accounting and financial statements.

 Framework of Accounting
 An overall theoretical foundation for accounting which will guide standard-setters,
preparers and users of financial information in the preparation and presentation of
statements.

 Foundation in the Preparation of Financial Statements

Financial Statements

Conceptual Framework PFRS/IFRS

 Purpose of Conceptual Framework


 The Conceptual Framework for Financial Reporting (Conceptual Framework) describes
the objective of, and the concepts for, general purpose financial reporting. The purpose
of the Conceptual Framework is to:
a. Assist the International Accounting Standards Board (Board) to develop IFRS
Standards (Standards) that are based on consistent concepts

STANDARDS
Conceptual Framework
(historical cost; current cost;
(Measurement Elements –
realizable value; present
measurement bases)
value)

b. Assist preparers to develop consistent accounting policies when no Standard


applies to a particular transaction or other event, or when a Standard allows a
choice of accounting policy; and
c. Assist all parties to understand and interpret the Standards.

 The Conceptual Framework provides the foundation for Standards that:


 Contribute to transparency in enhancing the international comparability and quality
of financial information, enabling investors and other
market participants to make informed economic Standards based on the
decisions Conceptual Framework
 Strengthen accountability by reducing the information provide information needed
gap between the providers of capital and the people to to hold management to
whom they have entrusted their money. account. As a source of
 Contribute to economic efficiency by helping investors globally comparable
to identify opportunities and risks across the world, thus information, those Standards
improving capital allocation. are also of vital importance
o For business, the use of a single, trusted to regulators around the
accounting language derived from Standards world.
based on the Conceptual Framework lowers the
cost of capital and reduces international reporting costs.

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