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FOREWORD
IASB is in the process of updating the
Conceptual Framework.
Framework for the Preparation & Presentation
of Financial Statements (1989)
Conceptual Framework for Financial Reporting
(2010)
INTRODUCTION
Financial statements are prepared and presented
for external users by many international entities.
However, there are visible differences found in
its preparation and presentation.
IASB is committed to narrow these differences
by seeking to harmonize regulations, accounting
standards and procedures in preparing and
presenting financial statements.
PURPOSE
Assists the Board and national standard setting
bodies in developing IFRS and national
standards.
Assists preparers of financial position, auditors
and users in dealing and complying with IFRS.
Provides interested users in the work of the IASB
with information about IFRS formulation.
STATUS
The Framework is not a standard. Thus, it is
overridden by IFRS.
In the absence of a standard, management shall
consider the applicability of the Conceptual
Framework in developing and applying an
accounting policy that results in relevant and
reliable information.
In cases of conflicts, the IFRS prevails over the
Conceptual Framework.
SCOPE
Objective of financial reporting;
Qualitative characteristics of useful financial
information;
Definition, recognition and measurement of the
elements from which financial statements are
constructed; and
Concepts of capital and capital maintenance.
Qualitative Characteristics
Elements of Financial Position
Recognition
Presentation and Disclosure
Other Users
Employees
Customers
Government and their agencies
General Public
Chapter 2
TO BE ADDED
FUNDAMENTAL QUALITATIVE
CHARACTERISTICS
Relevance
Materiality
Faithful
Representation
Comparability
Verifiability
Timeliness
Understandability
COST CONSTRAINT
Cost is a pervasive constraint on the information
that can be provided by financial reporting.
Reporting financial information imposes costs and
must be justified by the benefits of financial
reporting.
The rule is the benefit derived from the
information should be over the cost incurred in
obtaining the information.
However, its evaluation is substantially a
judgmental process.
SUMMARY
Status The Framework is not a standard. Thus,
it is overridden by IFRS.