AASB Conceptual Framework | Assignment

Running Head: AASB Conceptual Framework
AASB Conceptual Framework
Name of the Student
Name of the University
Author Note

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AASB Conceptual Framework
Table of Contents
Response to question 1...............................................................................................................2
Introduction............................................................................................................................2
Discussion..............................................................................................................................2
Conclusion..............................................................................................................................2
Response to question 2...............................................................................................................3
Introduction............................................................................................................................3
Discussion..............................................................................................................................4
Conclusion..............................................................................................................................5
Response to question- 3.............................................................................................................5
Introduction............................................................................................................................5
Discussion..............................................................................................................................6
Conclusion..............................................................................................................................7
References..................................................................................................................................9

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AASB Conceptual Framework
Response to question 1
Introduction
Faithful representation is referred to as a concept which states the financial statements
are to be produced in an accurate manner so that it reflects the actual condition of the
business. On the other hand, the exercise of prudence supports neutrality. Prudence is referred
to as the “exercise of caution” which is needed while making the modifications under the
uncertainty situations. (Conceptual framework, 2020).
Discussion
The concept of financial statements to be faithful and neutral gives rise to a political
dimension for trading-off the two characteristics, reliability and relevance. These two
characteristics are not considered to be conflicting by IASB or AASB (Unerman, Bebbington
& O’dwyer, 2018, pp. 497-522). The faithful representation and neutrality are the crucial
qualitative attributes for reflecting the financial information. However, it consists of certain
issues which raises question on neutrality and faithful representation of the financial
information. These issues are- (Conceptual framework, 2020)
 The accountants are responsible for the determination of the issues which exists and
this relies on a great deal of judgement.
 The consideration of probabilities recognises the criteria of the elements which are to
be relied upon.
 The standard setting activities are influenced by the economic and social
consequences and if the standards are questionable then the accounting standards are
also questioned.

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AASB Conceptual Framework
 The development of the accounting standards has been considered as a political
process and this process are not an objective process.
Conclusion
The economic phenomenon are represented in the financial reports in terms of words
and numbers. It is necessary for the financial information to not only present the relevant
phenomena but also to represent element of the phenomena which it focuses to represent in a
faithful manner. However, the element of an economic phenomena along with its legal form
are similar in same circumstances and in certain circumstances it is not. Therefore, for
representing the rights and obligations faithfully the reporting of substance in the financial
statements are required (Maynard, 2017).
Response to question 2
Introduction
The decision of IASB to modify the conceptual framework project and to accomplish
the project with efficiency has made an environment of optimism as well as uneasiness in the
financial reporting community. The conceptual framework has been considered as the
“cornerstone of high quality financial reporting” and it has also mentioned that the standard
setters are the custodians of this framework and they are not the owners. This conceptual
framework has been used both nationally and internationally for the purpose of developing
the accounting standards and how these frameworks are to be applied on the practical
applications based on the standards. It has been found that if the accounting standards and the
ultimate decisions are based on the logical interrelated concepts then the quality of the
financial reporting will enhance significantly. The decision of the IASB to allocate significant
resources for the purpose which aims to improve and complete the conceptual framework so