conceptual fraework for financial reporting 2010conceptual frame.docVIP

CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING 2010 HISTORY OF THE 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 (the IFRS Framework) approved by the IASB PURPOSE AND STATUS OF THE FRAMEWORK The IFRS Framework describes the basic concepts that underlie the preparation and presentation of financial statements for external users. The IFRS Framework serves as a guide to the Board in developing future IFRSs and as a guide to resolving accounting issues that are not addressed directly in an International Accounting Standard or International Financial Reporting Standard or Interpretation. In the absence of a Standard or an Interpretation that specifically applies to a transaction, management must use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgement, IAS 8.11 requires management to consider the definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the IFRS Framework. This elevation of the importance of the [IFRS] Framework was added in the 2003 revisions to IAS 8. THE IFRS FRAMEWORK Scope The IFRS Framework adresses: the objective of financial reporting the qualitative characteristics of useful financial information the reporting entity the definition, recognition and measurement of the elements from which financial statements are constructed concepts of capital and capital maintenance [IFRS Framework, Scope] Chapter 1: The Objective of general purpose financial reporting The primary users of general purpose financial reporting are present and potential investors, lenders and other creditors, who use that information to make decisions a