Conceptual Framework

Question 1

Definition

Answer 1

IASB- concepts that underlie financial statement preparation for external users

Question 2

Critique of conceptual framework/ reporting

Answer 2

Deegan and ward, 2013 ‘Investors and lenders are at the centre of reporting. Reports have primarily an economic focus- pestle

Question 3

Prevents misleading statements

Answer 3

Hines,1989
‘A number of company crashes in the U.S, u.k, Canada and Australia involving fraud were given clean audit reports with no indications that the companies were a going concern’
Seen as strategic manoeuvre for providing legitimacy to accounting profession

Question 4

Essay intro

Answer 4

Def- iasb- concepts that underlie financial reporting- should Objectively and faithfully represent companies- guidance on how assets etc recognised

Question 5

Benefits of conceptual framework- standard setters

Answer 5

Provides guidance for setting
Makes them accountable
Helps auditors and other users

Question 6

Benefits for companies

Answer 6

guidance and concepts- accruals, acting with prudence

Question 7

Qualitative characteristics

Answer 7

Relevance- decision making
Faithful representation- complete and neutral
Comparability
Verifiability- unbiased
Timeliness- up to date
Understandability

Question 8

Critique

Answer 8

Deegan and ward, 2011- economic focus- lack of pestle

Framework developed when accounting profession under threat- legitimacy

Question 9

Previous misleading statement

Answer 9

Hines,1989
Lacked identifiable body- company crashes involving fraud given clean audit reports- going concern
Strategic manoeuvre to increase legit