Conceptual Framework for Financial Reporting 2018 (Chapter 1 to 5) – Source: Yt

HISTORY OF THE CONCEPTUAL FRAMEWORK

 April 1989: Framework for the Preparation and Presentation of Financial Statements (the
Framework) was approved by the IASC Board
 July 1989: Framework was published
 April 2001: Framework adopted by the IASB
 September 2010: Conceptual Framework for Financial Reporting 2010 approved by the IASB
 March 2018: Conceptual Framework for Financial Reporting 2018 (the Framework) published

STATUS AND PURPOSE OF THE CONCEPTUAL FRAMEWORK

 The Conceptual Framework for Financial Reporting (Conceptual Framework) describes the
objective of, and the concepts for, general purpose of financial reporting.

 The purpose of the Conceptual Framework is to:

 Assist the International Accounting Standards Board (Board) to DEVELOP IFRS (Standards) that
are based on “consistent concepts”
 Assist preparers to DEVELOP CONSISTENT ACCOUNTING POLICIES when no standards applies to
a particular transaction or other event, or when a Standard allows a choice of accounting policy
 Assist all parties to understand and interpret the Standards

HIERARCHY (SCP)

1. Standard (IAS and IFRS)

2. Conceptual Framework
3. Policies

STATUS AND PURPOSE OF THE CONCEPTUAL FRAMEWORK

The Conceptual Framework provides the foundation for Standards that: (TAE)

 contribute to TRANSPARENCY by “enhancing the international comparability and quality of

financial information”, enabling investors and other market participants to make informed
economic decisions
 strengthen ACCOUNTABILITY by reducing the information gap between the providers of capital
and the people to whom they have entrusted their money
 contribute to ECONOMIC EFFICIENCY by helping investors “to identify opportunities and risks”
across the world, thus improving capital allocation