ACC301: Analysis of the IASB's Revised Conceptual Framework Report

This report analyzes the revised conceptual framework for financial reporting, focusing on the key concepts introduced by the International Accounting Standards Board (IASB). The report begins with an overview of the conceptual framework, followed by an examination of the objective of general-purpose financial reporting, emphasizing its importance to stakeholders. It then explores the concepts of prudence and asymmetrical prudence, highlighting their role in ensuring that financial statements are not misleading. Finally, the report discusses the concept of substance over form and its significance in accurately representing accounting transactions. The report is supported by relevant references to academic literature.

Accounting Theory &
Contemporary Issues

Table of content
 Conceptual framework in accounting
 Objective of general- purpose financial reporting
 Prudence & Asymmetrical Prudent
 Concept of substance over form
 References

Conceptual framework in accounting
The International Accounting Standards Board (IASB) issued the revised conceptual framework in
accounting in March 2018, which describe the comprehensive set of concepts for accounting and its
reporting.
It sets out: Financial reporting objectives
Guidance and concepts on presentation and
disclosure
Criteria for liabilities and assets including in
financial statements and also provide
guidance on when to remove them
Definition of a liability, an assets, expenses,
income and equity.
Useful characteristics for financial
information
A specification of the reporting entity and its
boundary
Bases of measurement and guidance on when
to use them

Objective of general-purpose financial
reporting
 The main objective of financial reporting is to renders all the information which is
relevant to the stakeholders directly or indirectly for making their decisions
(Kolesnik, Silska-Gembka, and Gierusz, 2019).
 It helps to the potential investors to know the actual or real position of the
company so that they can take decisions to invest in such companies (Pelger,
2019).

Prudence & Asymmetrical Prudent
 Prudence concept also known as principle
of conservatism which make sure that the
income & assets are not overstated and
expenses & liabilities are not understated
in the financial statements of the
company.
 Asymmetrical prudent occurs when the accountant
of the company make judgement which is related to
the asset or liabilities under the uncertainty situation
(Kolesnik, Silska-Gembka, and Gierusz, 2019).
 The asymmetrical prudence main function is to
make the accounting treatment for liabilities and
income for one period.

Concept of substance over form
 Substance over form is the concept that shows the true value of accounting transactions of the
company which basically include financial statements and accompanying disclosures of a
business. (Weik, 2019).
 A faithful representation of each transactions in the financial statements which helps to the
investors or stakeholders to take decisions which is related to their investment (Demin and
Nikolaev, 2019).

References
 Botosan, C.A., 2019. Pathway to an Integrated Conceptual Framework for Financial Reporting. The
Accounting Review, 94(4), pp.421-436.
 Demin, A.V. and Nikolaev, A.V., 2019. The Beneficial Owner Concept in the Context of Beps:
Problems and Prospects. Financial Law Review, (13), p.1.
 Kolesnik, K., Silska-Gembka, S. and Gierusz, J., 2019. The interpretation of the verbal probability
expressions used in the IFRS–The differences observed between Polish and British accounting
professionals. Accounting and Management Information Systems, 18(1), pp.25-49.
 Pelger, C., 2019. The Return of Stewardship, Reliability and Prudence–A Commentary on the IASB’s
New Conceptual Framework. Accounting in Europe, pp.1-19.
 Schroeder, R.G., Clark, M.W. and Cathey, J.M., 2019. Financial accounting theory and analysis: text
and cases. John Wiley & Sons.
 Weik, E., 2019. Understanding institutional endurance: The role of dynamic form, harmony, and
rhythm in institutions. Academy of Management Review, 44(2), pp.321-335.