Advance Financial Accounting - Assignment

Advance Financial Accounting

Table of Contents
Part A.........................................................................................................................................3
Task B........................................................................................................................................5
Part C..........................................................................................................................................7
Part D.........................................................................................................................................8
References................................................................................................................................10

Part A
International Financial Reporting Standards (IFRS) are designed for the purpose of providing
clear understanding of the company accounts all across the international boundaries. In this
context, conceptual framework assists the accountants in resolving accounting related issues,
which is a framework for the purpose of establishing accounting standards. This framework
associates all the aspects of the inquiries such as defining the problem, collection of data, and
analysis of the data and such others (Wisegeek, 2018). The conceptual framework is essential
for the development of accounting standards for preparing financial reports on the basis of
rules and principles.
There are certain qualitative characteristics of the financial statements that are not satisfied by
the existing reporting practices with regard to IFRS and they are;
 Relevance- It is considered as a significant feature of financial reporting to influence
the decisions of the users. It is the aim of the conceptual framework to ensure reliance
of financial information on predictive as well as confirmatory value, wherein,
predictive values are based upon predictions while confirmatory values are based
upon the feedback of the previous assessments. The information is considered as
relevant if it possesses the ability to add value to the process of decision making by
providing all the aspects relevant to the information (iasplus.com, 2013). In the
process of making financial reports, confirmatory value is also considered as highly
significant. Following the IFRS standards, the financial reporting involves the
calculation based on fair value concept for the purpose of measuring the values of
assets as well as liabilities. It might lead to enhance the unpredictable nature of the
assets as reported.
 Understand ability- It rely on the aspect of classification and exhibiting the
information in clear and concise manner. The clarity and understand ability of the

financial information is essentially required by the users. The information in the
financial reports is required to demonstrate the content with clarity with the help of
supportive footnotes along with them (Accounting Tools, 2018). With the help of
conceptual framework, the preparation of reports can be made possible in a user
friendly manner to be used by the users having business and economic activities. The
conceptual framework also provides for the required advice to understand
complicated information in financial reports to the users. However, there are few
disadvantages as well. As the IFRS standards are not accepted all across the world, it
becomes difficult to be understood at the international level. The principles included
in IFRS are not generally understood by the users easily. In addition, the financial
statements prepared with the guidance of IFRS provide only desired outcomes that
might result into manipulation of profit.
 Comparability- Financial Information has the capability to serve multipurpose
activity by existing significantly overtime as well as to be compared with the financial
information sources. The comparison of financial information is required in order to
evaluate varying aspects of the financial position of an entity. It is the conceptual
framework that identifies the comparability that could enable the users to differentiate
between the similarities as well as dissimilarities between the items. For the purpose
of comparison, two items are required i.e. financial information of existing year as
well as previous year (Connectusfund.org, 2018). The financial reporting related
activity in IFRS is considered as less comprehensive along with increased costs of
implementation. Due to the complicated nature of the information, ambiguity arises
sometimes and hence users find difficulty in understanding it easily and to compare it.
The implementation of IFRS requires the cost of training and making the accountants
aware regarding the principles involved.