Financial Reporting: IASB Frameworks, Concepts, and Assumptions

This report provides a comprehensive overview of the IASB's conceptual frameworks for financial reporting. It begins with an introduction to financial reporting and its importance in various industries, highlighting the role of the IASB in establishing accounting standards. The report delves into t...Read More

Financial Reporting

Table of Contents
INTRODUCTION..........................................................................................................................1
TASK 1............................................................................................................................................1
(1): IASB's Conceptual frameworks for financial reporting......................................................1
Objective of financial reporting:.................................................................................................1
Fundamental quality:...................................................................................................................2
Enhancing quality: .....................................................................................................................2
(2): Appropriate concept/ assumptions as crucial element use in financial statements..............2
Basic assumption: .......................................................................................................................3
CONCLUSION...............................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
In every industry, whether related to manufacturing or service they have multiple
departments which operate effectively in order to attain organisational objectives. Functioning of
these departments are not interdependent, but at closing of day they are connected together by
one common thread which accounting and reporting of financial transactions. This project report
is providing crucial information about IASB's conceptual frameworks those are use for financial
reporting. Further, certain concepts and important elements that are prepare in financial
statements are discuss under this reports (Nobes, 2014).
TASK 1
(1): IASB's Conceptual frameworks for financial reporting
Finance is an essential aspects that can assist an organisation to manager their overall
financial transactions which are done in an accounting period of time. As financial reporting
consists of disclosure of financial data to various stakeholder regarding the position of any
business entity. These stakeholder consists of different types of parties such as investors,
creditors, debt providers and government agencies. The international accounting standard board
is a form of conceptual frameworks which is being related to financial reporting. It proves that
standard references document for developing a perfect accounting standards. The frameworks
can determine as a theoretical base and a statements of principles. It provide various crucial
information about accounting statements (Costello, 2011). Such as:
 This would seeks to ensure that accounting standard will have regular approaches to
problem solving.
 It assist the IASB in formulation of coherent and regulation accounting standards.
 This is not said to a standard, but rather act as a guide to prepare financial statements in
order to enable them to resolve accounting related problems that are direct in a standard.
The frameworks use to considers various nature of reporting entity that address
fundamental question about preparation of financial statements.
Objective of financial reporting:
 The primary purpose of financial reporting is to provide useful information for making
crucial decisions for betterment of an organisations. The importance to economy for
providing capital marketing participants with data is more critical.
 Those decision consists of buying, selling and providing loans to other form of credit.
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Fundamental quality:
Relevance: It is essential to make financial statements more reliable to meet out
objectives of an organisation goals. It can satisfy demand of users those are chosen and recorded
in financial records. All information is based on future estimation and have confirmatory value.
These two are contributing to relevance of financial reporting data. If it has confirms or
exception based on previous evaluation as per IASB. Confirmatory value would assist in
financial statements users to confirm or adjust early expectations (Ruhl and Smith, 2013).
Faithful representation: It would include all aspects of financial statements which
results in operations, position and cash-flows of reporting business enterprises. It will be
considered in accordance with the concept of materiality. Henceforth, disclosure of transactions
with real parties is crucial in respect to determine entire information to a specific user.
Enhancing quality:
Comprehensibility requires financial informations to users with reliable knowledge of
business and economic activities. Moreover, it is improper to include complex transactions in
order to make simple and accurate solution to a problem.
 Comparability: It is use to compare within the entity and across entities. In order to
compares are made within the entity, information is to compare from one accounting year
to another.
 Verifiability: It helps to ensure users that data should represent faithfully in front of the
management. It simile terms all information which are collected can be audited properly.
 Timeliness: this means that proper information use for the purpose of taking crucial
decision on time to influence positive outcomes during an accounting period of time.
(2): Appropriate concept/ assumptions as crucial element use in financial statements
There are various types of financial statements that have been identified in order to
analyse financial position of the company. Some effective measure are discuss underneath:
Recognition: It is known as effective process of admitting information into various
financial statements of the company those are collected during an accounting period of time
(Recognition, 2018). An items can be recognise as an intangible objective in case it meet out
actual meaning of various aspects such as the costs of assets can be measure more reliably.
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Measurement: It is an essential system that can be define as total collection of
instruments, standard, methods as well as various assumptions use to determine quantify a units
of measurement. The value of a physical aspects can be analyse by it overall number.
Disclosure concept: Financial statements would be formulate to reflect a positive image
and review fair view of financial position of an organisation. Every physical and applicable
information that must be disclosure in financial statements in more proper manner.
Basic assumption:
Economic entity: It needs that activities of the enterprise that would be kept as separate
and distinct from all activities of their owner and other firms. Such as :
 Sole proprietorship
 partnership
 Corporation
Monetary units: It consists of accounting records only that transactions that can be
expressed only in terms of money (Agoglia, Doupnik and Tsakumis, 2011).
Going concern assumption: This has been assumed that every business would be
regulate for predictable during of time with no intention to close the business.
Periodicity assumption: It would be requires that companies can prepare report in
discrete time duration such as months, quarters and annually.
Accrual principles: Under this report, all transaction is being recorded in the books of
account at the time during the there occurrence. Henceforth, earning is recognised in only that
situation when it is actually realised.
CONCLUSION
From the above project report, it has been seen that financial reporting is an essential
aspect for every growing company. It is essential to evaluate overall conceptual frameworks
which are use in accounting statements. Understanding of objectives in respect to increase future
gains in an organisation so that valuable outcome can be identified in more effective manner.
Examination of various assumptions that are helpful in generating future growth and
sustainability for the company.
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REFERENCES
Books and Journals:
Nobes, C., 2014. International Classification of Financial Reporting 3e. Routledge.
Costello, A.M., 2011. The impact of financial reporting quality on debt contracting: Evidence
from internal control weakness reports. Journal of Accounting Research. 49(1). pp.97-
136.
Ruhl, J. M. and Smith, O. M., 2013. The Accounting Entity, Relevance, and Faithful
Representation: Linking Financial Statement Notes to the FASB and IASB Conceptual
Frameworks. Issues in Accounting Education. 28(4). pp.1009-1025.
Agoglia, C. P., Doupnik, T. S. and Tsakumis, G. T., 2011. Principles-based versus rules-based
accounting standards: The influence of standard precision and audit committee strength
on financial reporting decisions. The Accounting Review. 86(3). pp.747-767.
Online
Recognition. 2018. [Online]. Available through:
<http://highered.mheducation.com/sites/0072994029/student_view0/ebook/chapter1/
chbody1/recognition_and_measurement_concepts.html>.
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