OBJECTIVES

• General purpose financial reports


  Financial information prepared applying principles to achieve relevance and faithful representation for intended users
• Primary users of general-purpose financial information


  • Entities' existing and potential investors
  • Lenders
  • Other creditors
• Primary users


  • Make decisions relating to providing resources to the enterprise
  • Rely heavily on the information provided in the financial statements
  • Cannot require reporting entities to provide them direct access to detailed information
• Conceptual Framework for Financial Reporting


  Describes the objective of, and the concepts for, general purpose financial reporting
• The Conceptual Framework has undergone series of revisions based on the International Accounting Standards Board's (IASB's) experience of working with it
• The most recent revision of the Conceptual Framework was completed and published in March 2018
• Purpose of the Conceptual Framework

  1. Assist the IASB to develop International Financial Reporting Standards (IFRS) that are based on consistent concepts

  2. Assist preparers to develop consistent accounting policies

  3. Assist all parties to understand and interpret the Standards
• The Conceptual Framework is not a Philippine Financial Reporting Standard and is not a International Financial Reporting Standard
• Whenever there is a conflict between the Conceptual Framework and an accounting standard, the requirements of the accounting standards will prevail
• Chapters in the Conceptual Framework for Financial Reporting

  • Objective of General Purpose Financial Reporting
  • Qualitative Characteristics of Useful Financial Information
  • Financial Statements and the Reporting Entity
  • The Elements of Statements
  • Recognition and Derecognition
  • Measurement
  • Presentation and Disclosure
  • Concepts of Capital and Capital Maintenance
• General purpose financial reporting

  Aims to provide financial information about an entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity
• Decisions users make


  • Buying, selling or holding equity and debt instruments
  • Providing or settling loans and other forms of credit
  • Existing rights to vote on, or influence management's actions that affect the use of the entity's economic resources
• Information users need


  Economic resources of the entity<|>Claims against the entity<|>How efficiently and effectively the entity's management and governing board have discharged their responsibilities to use the entity's resources