Accounting Theory & Contemporary Issues

ACCOUNTING THEORY &
CONTEMPORARY ISSUES

Answer 1)
The Conceptual Framework plays a central role in providing the assistance to IASB in the
development and the revision of the International Financial Reporting Standards (IFRSs) in
order to facilitate the develop consistent accounting policies (IFRS, 2018a). Thus, the
framework considers and addresses the issues in the theoretical and conceptual context that
frame the financial reporting. Thus, not only a theoretical basis is formed for the
measurement of the transactions but also for the manner of reporting and presentation of the
same. Hence, the organisations can benefit on the conceptual clarity of the accounting
standards for the preparation and presentation of the financial statements.
Some of the issues that had governed the 2010 Conceptual Framework are described as
follows. A group of the critics had cited the reasons of the lack of clarity in the framework.
For instance, according to the Framework, the better bases for assessment of the past and
future performance are the accrual accounting policies and not the cash-based information.
However, the framework lacks to explain the same (Barker and Teixeira, 2017). In addition,
the framework has been criticised for the exclusion of the certain important concepts and not
enough support being provided to the current thinking of the IASB (Señeres and Villanueva,
2018).
Answer 2)
The objective of general purpose financial reporting can be stated to be providing the
financial information about the reporting entity, which would facilitate the interests of the
varied range of stakeholders within the enterprise such as the existing and potential investors,
creditors, lenders of the loans, regulators and others (IFRS, 2018b). Thus, the general purpose
of the financial reporting can be stated to be provision of a platform for making decisions for
the extension of resources to the entity. Hence, it can be stated that as organisations derive
their resources from the society, the financial reporting principles ensure that the interests of
the members of the society and society as a whole are not undermined and true picture of the
financial transactions and other business operations is presented. In addition to the financials,
the conceptual framework also provides the qualitative characteristics of the useful
information, and the boundaries within which an enterprise has to operate. The clear
definition of the concepts and guidance on presentation and disclosure are also one of the
chief objectives of the general-purpose financial accounting.