5-6

• Conceptual Framework


  Prescribes the concept for general purpose financial reporting
• Purpose of the Conceptual Framework

  • Assist the IASB in developing Standards that are based on consistent concepts
  • Assist preparers in developing consistent accounting principles when no Standard allows a choice of accounting
  • Assist all parties in understanding and interpreting the Standards
• Status of the Conceptual Framework

  The Conceptual Framework is not a Standard. If there is no conflict between a Standard and the Conceptual Framework, the requirement of the Standard will prevail.
• Effective date and transition

  • The amendments are effective for annual periods beginning on or after 1 January 2020, with earlier application permitted
  • The amendments should be applied retrospectively unless retrospective application would be impracticable or involve undue cost or effort.
• Scope of the Conceptual Framework

  The Conceptual Framework is concerned with general purpose financial reporting
• Why Conceptual Framework has been revised?

  In revising the Conceptual Framework, the Board sought a balance between providing high-level concepts and providing enough detail for the Conceptual Framework to be useful to the Board and others. The Board views the Conceptual Framework as a practical tool to help it develop Standards.
• Previous Conceptual Framework was issued in 1989 and partly revised in 2010, and was useful but incomplete and needed improvement
• Revised Conceptual Framework


  A comprehensive set of concepts for financial reporting
• Main changes in the Revised Conceptual Framework

  • Introduced the objective of general purpose financial reporting
  • Discussed the qualitative characteristics of useful financial information
  • Described the financial statements and the reporting entity
  • Defined the elements of financial statements
  • Discussed recognition and derecognition
  • Described various measurement bases and factors to consider when selecting a measurement basis
  • Included concepts on presentation and disclosure and guidance on including income and expenses in the statement of profit or loss and other comprehensive income
• Objective of financial reporting

  The foundation of the Conceptual Framework
• Fundamental Qualitative Characteristics of useful financial information

  • Relevance
  • Faithful representation
• Enhancing Qualitative Characteristics of useful financial information

  • Comparability
  • Verifiability
  • Timeliness
  • Understandability
• Reporting entity


  The entity for which financial statements are prepared
• Financial statements


  Provide information about the financial position, financial performance and cash flows of an entity
• Elements of financial statements

  • Asset
  • Liability
  • Equity
  • Income
  • Expenses
• Recognition


  The process of capturing for inclusion in the statement of financial position or the statements of financial performance an item that is the definition of an asset, a liability, equity, income or expenses
• Derecognition


  The removal of all or part of a recognised asset or liability from an entity's statement of financial position
• Measurement bases


  • Historical cost
  • Current cost
  • Fair value
  • Value in use
  • Current market price
• Factors to consider when selecting a measurement basis

  Relevance and faithful representation
• Presentation and disclosure


  Concepts on presentation and disclosure and guidance on including income and expenses in the statement of profit or loss and other comprehensive income