Conceptual Framework: Users, Analysis, and Lloyd Banking Group

This report delves into the conceptual framework for financial reporting, emphasizing its fundamental role in standardizing financial statement preparation. It defines the framework, highlighting its importance for providing detailed information to users and ensuring comparability across international businesses. The report identifies both internal stakeholders (managers, employees, board of directors) and external stakeholders (shareholders, investors, suppliers, customers) and their respective interests in financial statements. A case study of Lloyd Banking Group illustrates how the framework is applied, linking users to the company's financial reporting practices. A critical analysis evaluates the framework's impact on stakeholder satisfaction and competitive advantage, concluding that its implementation is crucial for reliable and comprehensive financial reporting.

CONCEPTUAL
FRAMEWORK

Table of Contents
INTRODUCTION...........................................................................................................................3
Introduction about conceptual framework...................................................................................3
Users of conceptual frameworks..................................................................................................4
Linking of users with listed company..........................................................................................5
Critical analysis............................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The conceptual framework for financial reporting can be defined as a basic document
which set particular objectives and concepts in order to prepare financial statements (Thorbecke,
2017). In the aspect of financial statements, conceptual frameworks are very crucial because in
the absence of it, users will not get desired informations in detailed manner. The international
accounting standard board publishes different documents regards to conceptual frameworks of
financial reporting time to time. The project report covers detailed description about conceptual
frameworks and its users. As well as critical analysis of section of conceptual frameworks. For
better understanding a company is selected that is Lloyd Banking Group. This company is listed
in FTSE 100.
Introduction about conceptual framework.
The term conceptual framework can be defined as a kind of system that is associated with
process of creation of different kind of rules and standards for preparation of financial
statements. Basically, these objectives and fundamentals of conceptual framework are evolved
by international accounting standard board in order to assure implementation of common
fundamentals in different nations. In addition, the conceptual framework is beneficial for
auditors with an objective of preparation of legal reports which can be understandable all around
the world. As well as due to this accounting information becomes more useful that helps in
detailing of elements of financial reports (Libby, 2017). In year 2010 , international accounting
standard board (IASB) produced new document which was conceptual framework for financial
reporting. In this framework, some basic concepts and chapters were missing and that's why in
year 2018, international accounting standard board published some other concepts for better
understanding. Thus, this is necessary for companies to apply these conceptual frameworks in
the process of preparation of different kind of financial reports which are used by both internal
and external stakeholders. In the absence of it, financial statements of companies will not reliable
and comprehensive. This is so because for an international business entity, it is important to
make their financial statements in manner which can be compared by rest of other companies. As
well as should be understandable for users across the nations.

Users of conceptual frameworks.
The conceptual framework of financial reporting is used by those business entities which
are operated at international level. This is so because by implementation of these frameworks in
the preparation of financial statements, companies can become able to compare their financial
position with rest of others at global level (Morioka, Carvalho, 2016). Mainly, the user of
conceptual framework are both internal and external stakeholders of companies. In the internal
stakeholders various parties are included such as managers, employees, board of director and
many more. These all stakeholders show interest in the financial statements of company. This is
so because managers are responsible for preparation of strategic strategies and plans which they
do on the basis of information derived from the financial statements. In the absence of proper
financial information they can not take corrective steps in order to take effective decisions. Same
as the employees are also key user of financial statements because on the basis of information
provided by financial statement, they can aware about own growth and development because if
companies' financial performance is good then employees will be rewarded. So in order to take
decision about whether they should continue with organisation or not, employees show interest
in financial statements (Mancini and Marchettini, 2018). In addition, the board of director (BOD)
are also show interest in financial statements. It is so because they are responsible for growth and
development of companies. For this purpose they show interest towards financial statements in
order to get information about financial transactions and position. Eventually, in the absence of
proper financial information about various aspects and activities this can be difficult for internal
department of companies to take corrective actions and decisions. On the basis of complete
financial information, the managers allocate funds in various activities effectively. Hence, it is
the main reason for which internal stakeholders show interest in financial performance of various
aspects.
Apart from the internal stakeholders of companies, external stakeholders also show
interest in financial statements of business entities. Under external stakeholders different parties
are included such as shareholders, investors, suppliers, customers and many more. All these
stakeholders have their own purpose from company and for this they show interest in financial
statements. Such as the shareholders show interest in financial statement of companies so that
they can decide about whether they should make purchasing of shares or not (Jones and Caruana,
2015). Due to analysis of financial position of companies, the shareholders can predict about

future dividend rate. As well as the suppliers also main user of financial statements of
companies. The reason behind this is that on the basis of financial position of business entities,
they make credit transactions. Like if a company's financial position is not good then suppliers
will not initiate to sale material on credit because if financial condition is poor then company will
not be able to pay back. Same as the investors also show interest in financial statements for
taking decision about investment in companies operations and activities. Thus, it can be stated
that both internal and external stakeholders show their interest in companies' financial statements
for their own purpose and objectives. Basically, this is important for business entities to present
their financial statements in front of different stakeholders so that they can evaluate about exact
financial position and can take suitable actions accordingly. If companies will not present their
financial statements to internal and external stakeholders then it may be difficult for them to get
more investment from external parties.
Linking of users with listed company.
In order to understand about user of financial statements, a company is chosen which
Lloyd Banking Group. This company is located in London, United Kingdom and listed in FTSE
100. The company has a vital range of stakeholders including both internal and external
stakeholders (Nørreklit, Raffnsøe-Møller and Mitchell, 2016). This is so because they are major
financial entity in the context of entire United Kingdom and due to it there are various
stakeholders who want to make investment. Basically, their key stakeholders are external
stakeholders such as customers, government (central, local and regional), regulatory bodies,
investors, suppliers, trade unions and many more. All these stakeholders show their interest in
companies financial position so that their own objectives can be fulfil. Like their customers show
interest in their financial position and statements so that they can decide about making purchase
with company or not. Herein, this is important to know that among these stakeholders, the
investors are key stakeholders for above company. It is so because they make investment in
companies operations on the basis of financial position and statements. As well as some other
stakeholders like government also show interest in above Lloyd Banking Group's financial
statements so that they can decide taxation. Basically, the government takes tax from the
business entities on the basis of generated revenues. Thus, it is then main reason for which
government shows interest in companies financial position. Along with another external
stakeholder like trade unions also show interest in companies financial statements so that they

can keep an extra sight of eye on financial performance in an effective manner. Like in the
context of above chosen company Lloyd banking group, the trade unions assess key financial
information from their financial statements. So these are their external stakeholders who make
their interest in business entities financial performance and for which they get information from
financial statements.
Apart from these external stakeholders, the above Lloyd Banking Group has internal
stakeholders too who show their interest in their prepared financial statements. Some key users
of their financial statements are employees, managers and many more. These stakeholders show
interest in their financial statements in order to fulfil their own objectives and goals. Like their
managers derive information from financial statements about total revenues and expenses in
particular year. On the basis of it, they guide to their board of director for preparation of effective
strategies and plans. Basically, in the absence of complete financial information about business
transactions the managers can not take futuristic steps. Hence, this is the main reason for which
they show interest in financial statements of above Lloyd Banking Group. In addition, their
another internal stakeholders such as employees also assess the financial information from
prepared financial statements (Haslam and Katechos, 2016). The reason of showing interest in
above Lloyd Banking Group's financial statement is that they want to know about actual
financial position in order to assess the scope of their own development and growth. This is so
because if a company is continuously facing lose year by year then it can be difficult for
employees to sustain. So due to this, the employees of above company shows interest in their
financial statements. If financial information will be hidden from employees then there will be
lot of conflicts inside of business entity. So the above Lloyd Banking Group has both internal
and external stakeholders who show interest in financial position. In addition, this company
present their financial informations to their external stakeholders at the end of accounting time
period. Due to this, their external stakeholders get in touch about exact financial condition and
make investment accordingly.
Critical analysis.
The conceptual frameworks provide guidance to accountants for preparation of financial
statements in an effective manner which can be used by all of users across nations (Liu,
Oosterveer and Spaargaren, 2016). The international accounting standard board, publishes

conceptual frameworks timely so that companies may prepare their financial statements on the
basis of these frameworks. In the aspect of above chosen company Lloyd Banking Group, they
are preparing their financial statements as per the conceptual frameworks which are decided by
international accountant standard board. Due to involvement of conceptual frameworks in the
aspect of preparing financial statements, it becomes easier for their internal and external
stakeholders to assess actual financial position and comparison with rest of other entities.
Basically, the Lloyd Banking Group, is a financial entity and it is important for them to involve
all kind of frameworks whose objective is to make financial statements more reliable and
comprehensive. If they will not do so then this may lead to conflict between their stakeholders.
Like the International accounting standard board published frameworks for two times, one in
year 2010 and another in year 2018. In year 2010, there were some information missing about
basic concept of conceptual frameworks and in order to resolve it , the international accounting
standard board published revised frameworks in year 2018.
After this, most of companies successfully implemented these frameworks in the aspect
of their financial activities and operations. The Lloyd Banking Group, also enabled these
standards in the preparation of financial statements and because of it their stakeholders became
able to make comparison of their financial position with others (.Owusu, Donkor and Owusu‐
Sekyere, 2018). Thus, it can be stated that role of these conceptual frameworks is important in
order to better satisfaction of internal and external stakeholders. In addition, the reason of
success of above respective Lloyd Banking Group is the implementation of conceptual
frameworks in their activities. As well as in the context of competitive environment, this is
essential for companies to apply these conceptual frameworks so that they can achieve
competitive advantage over their rivalry firms.
CONCLUSION
On the basis of above project report, it has been concluded that in terms of financial
reporting role of conceptual frameworks is too crucial. It is so because if companies will not
follow these frameworks then this can be difficult to satisfy need of all stakeholders. Under the
project report, detailed describing of conceptual framework is done. In addition, the users of
financial statements is mentioned along with their purpose in the financial information of
companies. The further part of project report consists information about interrelation of

company's stakeholders with financial performance of companies. The project report concludes
that overall about conceptual frameworks and its importance in aspect of financial performance.
In the end part of project report, critical analysis is done about integration of financial statements
with conceptual frameworks which are set by the international accounting standard board at
world level.

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