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IASB Framework and Its Preparation and Presentation of Financial Statements in 1989 - Case Study Example

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The paper "IASB Framework and Its Preparation and Presentation of Financial Statements in 1989" states that the project of altering the concepts will involve important resources from both Boards and extensive input from their elements. But the task will aid in settling critical accounting issues…
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IASB Framework and Its Preparation and Presentation of Financial Statements in 1989
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Download file to see previous pages A variety of base for measurement is used in financial reports like the current cost, net realisable value, historical cost, and present value and these are acknowledged by the framework. But the rationale for taking the measurement bases is not laid down in the framework (IASB Framework, 2001, paragraphs 1, 100, 101). This is the main problem with the IASB Framework.
Information contained in the financial statements when it is conveyed is reliable only if it does not contain any errors. The IASB’s present definition of reliability is: “Information has the quality of reliability when it is free from material error and bias and can be depended on by users to represent faithfully that which it either purports to represent or could reasonably be expected to represent.” (IASB Framework, 1989, Para. 31).
If there is no direction furnished by an accorded framework then setting a standard to be followed would end up being established on the individual constructs formulated by each member of the standard-setting body. Thus if standards are set, based on individual concepts, then such frameworks will be useful only when those individual frameworks occur to traverse on that issue.
The IASB Framework is meant to help not only standard setters but at the same time it assists the preparers of financial statements to apply international financial accounting standards when they deal with topics on which measures have not yet been formulated, auditors to form their views with regard to the financial statements, and users to interpret information which the financial statements contain. All the above-mentioned purposes of a financial statement will be better served only if the concepts are sound, all-inclusive, and internally coherent.
In common terms, a conceptual framework is, in reality, a basic structure which is used to for organising one’s ideas with regard to what one tries to do and how to go about doing it. Thus when the framework is the result of an agreed conceptual framework then it would provide consistency and will answer the question which is crystallised by the Corporate Report and reliable access to decide as to what is better accounting and to set the best accounting standards. ...Download file to see next pagesRead More
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