Financial Reporting

Framework
CA DR. PRIYA AGASHE
 Learning Outcomes

 Understanding the framework and its role in accounting and interpreting

 Acknowledging different users of Financial Statements
 Constraints of relevant and reliable information
 Underlying assumptions and qualitative aspects
 Differentiate between the two forms of capital

Reporting Framework Video

CA Dr. Priya Agashe

 Meaning and Purpose

 Sets out the generally accepted principles and

assumptions underlying preparation and presentation of
FS as per ASB guidelines
 Purpose
 Assists preparers of FS
 Assists auditors in forming their opinion
 Assists different users for FS for interpretation
*****NOT a standard in itself

CA Dr. Priya Agashe

 Scope

Objectives of
FS

Definition,
recognition
and
Framework Qualitative
measurement deals with aspects
of elements

Capital & its

maintenance

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 Exceptions

 Special Reports for

 Taxation reports
 Prospectuses
 Specific Purpose reports

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 Users of FS

Vendors

Public Customers

Managem
Employees
ent

Investors / Governme
Lendors of nt
Capital Agencies

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 Objectives of preparing FS

 Demonstrate Financial Performance

 Give useful financial information to the users of FS
 Know management style and their future plans

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 Underlying Assumptions of FS

Going Concern

Accrual

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 Qualitative Aspects of FS

Relevance /
Understandability Comparability Reliability
Materiality

Faithful Substance over

Neutrality Prudence Completeness
Representation Form

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 Constraints on Reliable & Relevant
Information

Timeliness

Cost &
Benefit
Comparison

Balance
between
Qualitative
Information

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 Elements of Financial Statements

Asset

Expense Liability

Income Equity

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 Recognition of Elements of FS

An item can be recognised only if it meets the following criteria:

i. It is probable that any future economic benefit related to the item will flow to / from the entity
ii. The item has a cost or value that can be measured with reliability

CA Dr. Priya Agashe

 Measurement of Elements of FS

Fair
Value
Present
Value

Tools
Current
Cost
Historical
Cost

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 Capital Maintenance

Physical Capital Financial Capital

 Profit = Physical Operative Capacity at  Profit = Assets at the end > Beginning
the end > Beginning (after (after appropriation)
appropriation)
 Current Cost
 No particular method of recognition

CA Dr. Priya Agashe