Conceptual Framework, IFRS and Their Application - Essay Example

The conceptual framework, IFRS, and their application Name Institution Course Instructor Type of assessment: Assessment Date of submission. Introduction IFRS is the International Financial Reporting Standards and is known for the provision of a common global language for affairs related to business (Brochet, 2013). These affairs are used by the accounts of organizations in comparing and understanding the international boundaries on accounting. The IFRS is mandated to give financial statements. Accountants are expected to apply their knowledge on accounts in solving issues in the practices concerning professional accounting (Sheppes, 2012). Additionally, the other r goals of the program are to ensure that there is an ethical, critical reflective as well as self-awareness on the professionalism in accounting. Besides, all accounting professionals are supposed to be effective in communication. The assessment is reviewing the main issues in contemporary accounting practices and theory as well. There are various frameworks that underpin these practices and theories of accounting. Their evaluation is to be assessed in details in this assessment (Macye, 2015). There are numerous problems that are faced in the financial reporting practices. Therefore, the current financial accounting as well as giving of reports has a basis currently, which is analyzed too in the assessment (Cao, 2015). The IFRS prepares financial statements that are meant for use by external individuals across the world. The financial statements are used to assess the progress of particular nations by any interested party. Therefore, a common protocol is followed in the presentation of these financial statements thus several countries having their financial statements similar (Cajaiba-Santana, 2014). Each nation in the presentation of financial statements use the terminologies involved for different meanings. As a result, there has been a difference in identification of the meanings of the terminologies in each country. The IASB is a department or rather an organization that was created to narrow down the differences that were evident in the presentation of financial statements of different nations. It solved the divergence in reports from the IFRS standards body thus a creation of unison in presentation as well as preparation of financial statements. Therefore, the accounting theory is a set of assumptions that are required in the production and creation of financial statements. Issues in contemporary accounting theory and practices In accounting practices, there are a number of issues that crop from the theories on accounting as well as its practice. These issues affect working of the accounting professionalisms in ensuring the accounting theory is applied along sides its practices. These financial accounting standards are known for bringing transparency through the creation of enhancement of the international comparability as well as assessing the quality of information from fiancé. Therefore, they create a chance for other participants in the market as well as investors to make economic decisions that are informed (Daske, 2013). These standards of IFRS reduce the gap of information that is between the capital providers and those individuals who have entrusted them with their cash for security. As a result, these standards provide more strength on accountability of organizations. Through the standards of IFRS, the details and data required to sustain management of accounts are provided. The regulators in the world also eyed these IFRS standards for the success of their partitions and cartels. In the standards of IFRS economic efficiency is sought. The investors are able to identify the risks as well as opportunities available in the world thus making the right decision on accounting (Palepu, 2013). Frameworks underpinning financial accounting As intellectuals, one is not supposed to be mandated to make decisions or situations solutions to some factors and issues. The financial frameworks offer quality and adequate advice on finance. The advice is meant to assist their consumers on how to make the new goals in finance as well as in making and setting of decisions. Pension, education saving plan as well as superannuation is among the numerous accounts problems facing the frameworks. Therefore, the accounts officers may do inaccurate work due to the use of long-term relationship data (Cao, 2015). These financial reporters are expected to be experienced for more than a decade in the same profession. Also, advertisements work better where different advertisement. Presence of framework results to presence of main and key financial data whereby the framework management is a challenge. Many individuals as having wrong balance sheets due to the absence of accurate data. Therefore, according to assets, there if embodiments of the future benefits. Therefore, many assets have developed a physical form, which is not essential to the existence of assets. Cash, in this case, is seen as the medium of exchange. One needs to have sufficient cash in order to get services rendered to them as they use it in exchange of goods and services. Assets are distributed further equally into equal portions depending on the manner of asset available (Dung, 2016). Also, liability turns to be past events of transactions that have already been made in a time that passed away. They are from a memory to the financial report and records as well. Therefore, between the future commitments and the present obligations, a distinction needs to be drawn. The drawing needs to be made by the entity management body. These decisions once made on the future assets, do not produce adequately the required results of the liability and equity as well. Once an asset is delivered, we have the obligations, therefore, rising greatly. Substantial estimation has a degree that is used to measure some several liabilities. From some entities, one can easily term them as provisions (Brochet, et. al, 2013). Therefore, liabilities narrow down further the meaning and composition of liabilities in IFRS as a way of reducing the number of values recorded in the results. Current financial accounting and reporting practices In comparison to the existing financial accounting reporting and practices, the terminologies have been adopted. The existing practices and reporting had divergence from a nation to the other due to the different understanding of accounting terminologies. After moderation and justification of these meanings, one can easily understand the financial accounting reports as well as practices. The financial reporting and practices currently have the following common elements. They include assets, liability, expenses, income, performance, financial position as well as equity (Palepu, et. al. 2013). These factors are necessary for a presentation of financial reports and practices. These financial elements are normally presented in balance sheets with the income statements entailing the processes required in sub classification of the statements. The financial accounting practices give the practicals and normally applied in accounting. In financial accounting reporting, daily financial data is recorded and monitored in the financial activities of the specific companies and organization (Beasley, 2006). On financial position element of financial reporting and recording, we have a direct relationship between the equity, liabilities, as well as assets in the current financial records and reports. According to the current reports, the meaning of assets is the resources that are monitored by the entity which happens due to the events that have passed as well as the expected entity flow in the near future. Liability is used as the current obligations of the entities that have risen from the previous events. Also, the expected range of results in the outsourcing flow of resources from entities is related to the definition of liability with it embodying the benefits from economic reports. Finally, equity is used in the current financial reports and records with the meaning of the interest of entities that are received after the deduction of all liabilities is made. It is in various ways that the flow of assets may be. They may flow in exchange for other different assets as well as be used in settling of the pending liabilities (Assessment, 2013). According to the current reports on financial statements, income is the gain or revenue received either by individuals or organizations. The revenue, in this case, is found during the performance of ordinary activities. Some terminologies like interest, fees, sales, or dividends can be used in place of revenue. Problems in current financial reporting practices Judgment calls, as well as their estimates, are necessary for the creation of corporate financial statements. These judgments in most times are inaccurate to be used in the financial report records and analysis. These inaccurate data results to having differences in the final balance sheet values in comparison to the accurate balance sheet that has used the correct values (Brochet, 2013). Besides, the financial officers assume some minute values as others underestimate or overestimate these values, thus inaccuracy in presentation and reporting of these financial statements. Another problem that is greatly faced by the financial statement reporters is inadequate data from the accounts offices. They find it hard to get the right values for accuracy. According to question 1, the assets used by B Ltd are slightly lower than those of A Ltd. Therefore, this deviation results to a great divergence in the balance sheet as well as the values in the financial and accounting reports and presentations. Also, the financial report readers are at risk of not understanding the record thus not knowing how to manage their daily finances (Dung. 2016). As the management also tries to sensitize people on proper and efficient management of their daily funds, they are probably for meeting with individuals who do not even understand the symbolization of some symbols as well as meaning to terminologies used. Besides, these trainers on financial reporters and recorders may also not be well equipped with adequate knowledge in accounts thus facing a challenge from some several inquisitive accountants (Sheppes, 2014). The financial and accounts management are at a risk of being succumbed by unforeseen events. Therefore, protection against these unforeseen events was necessary to these current accounts reporters and finance reporters. As one keeps records on their best method of protecting the data collected by accounts record keepers. Question 1. The conceptual frameworks do not identify fair values of the basis of measurement. Therefore, measuring of assets is not acquired. The liabilities also are assumed and the combination in the business is at the fairest value that is consistent with the Conceptual Framework. These conceptual frameworks are necessary for the determination of the assets and liabilities that are available from her as well as allowing the presence of a hierarchy that is followed in Report presentation (Brochet, 2013). The ordinary share is going at 388,000 which is the fairest value that can be used for the records presentation. Fair values are necessary for the success of presentation and report submission entails more values from the real value. The values that were used in this case in the presentation of the financial statement and report are fair enough. Usage of assets which are $2500000 and $300,000 are better in comparison the $400,000 and $500,000. The conversions of money have used several formats for the achievement of these fair deviation. Therefore these charges are probably of greatly affect the financial statement of A Ltd in the year that was stated to be the acquisition year as well as in the near future. Question 2. IASB project. According to IASB, financial statements should include the time when investors should buy or sell as well as when the organization should hold their investments. Besides, they are mandated to decide the policies to be used in taxation by several nations. The ED stands for Exposure Draft whose purpose is to revise the current definition to liabilities and assets. The assets are defined, according to ED, as the current economic resource that is determined by the entities due to the recording of past events. These economic resources are based on the rights that are found able to produce economic benefits to the firm’s financial sector (Beasley, 2006). These current definitions of ED differ from the old definition due to the adjustments that have been made on the key elements of final ED definition that is used up to date. These differences lead to the difference in the ED value from the old records. The ED has made several recommendations on the areas of accounting and measurements as well. Therefore, due to this changes that has occurred on making changes to the estimates. The ED offers more than requires guidance more to the financial reporters and presenters as well. Reference list: Assessment, W. S. B. P. (2013). Conceptual Framework. Beasley, M. S. (2006). An empirical analysis of the relation between the board of director composition and financial statement fraud. Accounting review, 443-465. Brochet, F., Jagolinzer, A. D., & Riedl, E. J. (2013). Mandatory IFRS adoption and financial statement comparability. Contemporary Accounting Research, 30(4), 1373-1400. Cajaiba-Santana, G. (2014). 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Emotion regulation choice: A conceptual framework and supporting evidence. Journal of Experimental Psychology: General, 143(1), 163. Read More