International Financial Reporting Standard docx

Running head: CURRENT DEVELOPMENT IN ACCOUNTING
CURRENT DEVELOPMENT IN ACCOUNTING
Name of Student
Name of University
Author’s Note

CURRENT DEVELOPMENT IN ACCOUNTING2
Table of Contents
QUESTION 1:.....................................................................................................................3
QUESTION 2:.....................................................................................................................6
QUESTION 3:.....................................................................................................................9
REFERENCES:.................................................................................................................13

CURRENT DEVELOPMENT IN ACCOUNTING3
QUESTION 1:
In order to represent the financial statements of any business entity, it is mandatory to
follow the concept of faithful representation. The accurate representation of the financial
statements is what the concept of faithful representation demands (Aasb.gov.au. 2.12-2.19 2020).
The extension of the faithful representation should be there in all parts of the financial statements
including the operation of the company, financial position of the company and also the cash flow
statement of the company. For example, if the balance sheet of the company in the annual report
reflects that the current assets are $ 1 million, then that amount should present with the company
on that date.
Information that is present in the financial statements of the company should be free from
any kind of bias (Deegan, pg – 93-96, 2014). This representation of the financial statements
states the balanced view of the affairs of the company without favouring anyone. This faire view
of representation is known as neutrality. There are two types of biasness. They are deliberately
bias and systematically bias (Aasb.gov.au. 2.16, 2020).
When management intentionally creates misstatement in the financial statements of the
company is known as deliberate bias. Systematic bias, on the other hand, is biasness which
occurs due to the favouring outcome that exists in the accounting systems.
The representation of the financial statements should be fair and maintain neutrality. The
fair representation of the financial statements is one of the major demands that any accounting
board of a country demands from the business entity. Thee fair representation of the financial
statements actually helps to value the shareholder’s interests.

CURRENT DEVELOPMENT IN ACCOUNTING4
The fair representation of the financial statements and maintaining neutrality during the
creation of the financial statements are some of the major criteria that any accounting board of
the company demands. The accounting board of any country creates these rules, so that they can
safeguard the shareholder’s interests. In order to safeguard the shareholder’s interests the
accounting board releases four major types of accounting standards. They are recognizing of the
financial events, measurement of the financial statements, and presentation of the financial
statements in fair manner and assist the company to disclose all the information, so that the
stakeholders are not misinformed.
Thus, the main reason due to which the accounting standard board like IASB and AASB
includes the concept of fair representation and neutrality are as follows:
1. In 2010, IASB’s conceptual framework states two principles. The first principle was about
the relevance of the information and faithful representation. Relevant information of IASB
2010 conceptual framework states about the needs for the right information in accounting.
This principle states that the actual information assists the accounting tool to represent
proper financial statement to the company. This accounting principle brings comparability
to the financial statements of the company. This accounting principle allows the
stakeholders to make inter-firm and intra-firm comparisons. The checking enables the
stakeholders to identify the firm’s financial position and also the position of the company
in the industry.
2. IASB 2010 conceptual framework also states about the faithful representation of the
information in the financial statements of the company. The faithful representation of the
financial statements of the company satisfies the needs of the stakeholders of the
company. This accounting standard discloses the methods that any business entity needs