Advanced Financial Reporting: Comparison of New Framework with 1989 IASB Framework

Advanced and financial reporting

Advanced Financial Reporting 1
TABLE OF CONTENTS
Contents
Background................................................................................................................................3
Objective of financial reporting.................................................................................................3
Underlying Assumptions............................................................................................................4
The qualitative characteristics....................................................................................................4
The use of Fair Values in the preparation and presentation of financial statements..................7
Conclusion..................................................................................................................................8

Advanced Financial Reporting 2
INTRODUCTION
The conceptual framework defines the models that lie behind the preparation and presentation
of financial statements for users. The conceptual framework gives direction to the
professionals in emerging future standards and resolving accounting issues which are not
mentioned openly in the International Accounting Standard or International Financial
Reporting Standard (IFRS). This purpose of this report is to make comparison of the new
framework with the 1989 IASB (International Accounting Standards Board) framework. The
comparison is done on preparation and presentation of financial statements (Chen, Gavious &
Lev, 2017). It also discusses the opinions and arguments for the use of fair values in the
presentation of financial statements. The report also includes the comparison to the historical
cost convention.

Advanced Financial Reporting 3
The Conceptual Framework for Financial Reporting
Background
The conceptual framework has been left unchanged since it’s initiation in 1989. The IASB
and FASB revised conceptual framework in 2004. It was developed to provide direction to
users in preparation of financial reports and principles. It provides the concepts that can be
applied in emerging International Public Sector Accounting Standards (IPSAS). IPSAS are
established to apply in other countries and jurisdiction with different forms of government
(Christiaens, Vanhee, Manes-Rossi, Aversano & Van Cauwenberge, 2015). In 2011 the
conceptual framework was reactivated and finalised. It provides various open conceptual
issues which are faced in various current projects. So, IASB decided to add project to it’s
agenda in 2012. It focuses on the topics which are not yet covered such as presentation and
disclosure and shortcomings which are need to be improved other than the amendment of
framework. In the first step it covers all aspects of framework which were issued in 2013.
The purpose of conceptual frame work is to improve conceptual framework and provide base
for evolving future accounting standards. It also aims to serve direction to the board in
emerging future IFRS standards and address issues (Christensen, Lee, Walker & Zeng, 2015).
It also considers the definitions and measurement concepts such as income, expense assets
and liabilities in the IFRS framework.
Objective of financial reporting
The users of financial reporting are investors, lenders, creditors and prospective shareholders.
They make use of information for taking decisions like buying, selling or holding equity or
debentures. The users need information about future net cash inflows and resources of entity.
The general purpose financial reports do not provide data required by users to take economic
decisions. It is also needed to consider relevant information from other sources (Hoyle,
Schaefer & Doupnik, 2015).
The sensible parties and market controllers find general purpose financial reports more
useful. According to board the objective of financial reporting and objective of financial
regulations may not be constant. So, the controllers cannot be considered as main users. The
purpose of financial reports cannot be mainly directed to regulators. These are not considered