Accounting theory and contemporary issues Name of the university Student ID

Running head: ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Accounting theory and contemporary issues
Name of the student
Name of the university
Student ID
Author note

1ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Table of Contents
Answer 1..........................................................................................................................................2
Answer 2..........................................................................................................................................3
Answer 3..........................................................................................................................................3
Answer 4..........................................................................................................................................4
(a) Substance over form..........................................................................................................4
(b) Faithful representation......................................................................................................5
Reference.........................................................................................................................................6

2ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Answer 1
Role of conceptual framework – purpose of conceptual framework is to help the IASB is
developing along with revising the IFRSs on the basis of consistent concepts. For setting as well
as issuing accounting standards conceptual framework plays vital role and preparers are required
to follow the same. It states different concepts linked with financial reporting, recognition of
financial activities, measuring accounting information and presenting the same in compliance
with appropriate accounting systems (Bauer, O'Brien and Saeed 2014)
Benefits of conceptual framework – various benefits associated with compliance with the
conceptual framework are as follows –
 It offers basics regarding all the objectives as well as rationale
 It helps the preparers, auditors and financial statement users in understanding the
approaches associated with setting of the standards, nature as well as the function of the
information reported in the financial statements.
 It clarifies the inherent conceptual of accounting standards and allows the setters of the
standards in developing accounting standards.
Criticisms of current (2010) framework – different criticisms linked with the existing (2001)
conceptual framework are mentioned below –
 Numerous guidance are provided to the accounting standard setters that creates rigidity
which in turn makes the implementation of new ideas difficult
 One particular framework is not adequate to fulfil all the financial statement users need.