The Importance of the IASB Conceptual Framework

The Conceptual Framework for Financial Reporting was issued by the International Accounting Standards Board (IASB).

This document contains a group of interrelated objectives and theoretical principles that serve as a frame of reference for financial accounting, and more specifically, financial reporting.

A framework serves as a reference for an area of inquiry and often provides the is a set of theoretical concepts and principles, which forms the basis for establishing and developing reporting practices

Accounting framework is the basic concept that accounting reports or financial reports are prepared

IASB is the International Accounting Standards Board (IASB) and it is an independent, private-sector body that develops and approves International Financial Reporting Standards (IFRSs).

importance of the IASB Conceptual Framework

  • To assist the IASB in the development of future IFRSs and in the review of existing IFRSs in order to enhance consistency across standards, and over the period as members change and provide a benchmark for judgment.
  • To assist the national standard-setting bodies – such as the National Board of Accountants and Auditors (NBAA) – in developing national standards, e.g. TFRS 1.

  • To assist the IASB in promoting harmonization of regulations, accounting standards, and procedures – through a reduced number of alternative accounting treatments permitted by IFRSs that could lead to creativity in accounting.
  • To assist preparers of FSs in applying IFRSs and – dealing with topics that have yet to form the subject of an IFRS, e.g. consider CF when developing accounting policies for such topics (IAS 8: Para. 10-12; IAS 1: 22)

The Conceptual Framework is not an IFRS and does not override any particular disclosure or measurement requirement in any IFRS. It is the foundation on which principle-based IFRSs are founded.

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