However, it was not until 1999 that the UK developed a framework which it described as – ‘Statement of Principles for Financial Reporting’. Both frameworks were based on work done in US, Canada and some other countries (Dyson 2007). Before that time the bases for financial reporting were various rules and custom and standards which were mainly ‘fire-fighting exercises’ (Dyson 200?). The USA, however, was much earlier in developing a conceptual framework in the 1970’s. This framework was also developed out of a number of crises over the years which led to the creation of the Securities and Exchange Commission in the United States in 1934 under whose charge the FASB falls. Subsequently, there have been additional crisis in the United States especially that which led to the Sarbanes Oxley Act 2002. This Act has laid down certain requirements for companies listed on the stock exchange. All these have one objective – the protection of stakeholders, while minimising the differences in reporting by companies. The IFRS framework deals with the objectives of financial statements, the qualitative characteristics that determine the usefulness of these statements, the definition, recognition and measurement of the elements from which they are constructed, and the concepts of capital and capital maintenance (BPP 2009, p. 36). They form a common basis on which financial statements are repared, thus creating a basis for discussion. These frameworks have provided guidelines in relation to disclosure of information, measurement, recognition and presentation of financial statement components. This means that company executives have to abide by these guidelines if they want their auditors (assurance providers) to indicate that their financial statements show as true and fair view. This has helped to constrain the freedom of company executives. Harmonisation and convergence projects There have been frequent calls for harmonisation and this has borne some fruit with over 100 countries accepting the International Financial Reporting Standards (IFRS) with additional countries such as Canada being one of the most recent adoptees (Sungard 2011). According to PricewaterhouseCoopers (2011, p. 3) as a result of mergers and acquisitions through business dealings with non-US customers and vendors IFRS continue to affect US companies. This has led to the convergence project for a conceptual framework which is a joint project between the International Accounting Standards Board (IASB) the preparers of IFRS and Financial Accounting Standards Board (FASB) the preparers of US GAAP. The objective of the project is to develop an improved conceptual framework as a basis for developing accounting standards in the future (Financial Accounting Standards Board n.d.). All these are aimed at making financial statements that have been produced in different countries more comparable. Additionally, investors will feel more secured and confident in the information provided in the statements. The Need for Integrated Reporting The frameworks provided by various accounting bodies though undergoing continuous revision have not been able to keep up with the pace of changes in the global environment. Investors and other stakeholders find themselves being short changed by insufficient disclosure, an inability to link the figures provided in the
Integrated Reporting Introduction Over the years companies, investors and stakeholders in companies have seen the development and implementation of various rules and subsequently the development of conceptual frameworks for the preparation and presentation of financial statements…
Businesses and organizations have gained significant benefits with the increase in globalization all over the world. Among many benefits, one key advantage associated with globalization is that it has enabled business entities to adopt accounting frameworks which are internationally accepted and recognized.
The effort is aimed to orchestrate the financial systems of International Financial Reporting Standards (IFRS) and the US Generally Accepted Accounting Practices (GAAP). In this paper, the writer intends to analyze and evaluate this joint effort. Research Question Explain what is meant by a ‘conceptual framework’ for financial accounting, discuss the reasons why such a framework might be useful and the reasons why the IASB and FASB believe it is necessary to develop a joint framework.
d reducing costs. In this paper, a look at how Woolworth has embedded sustainability into its day to day business practices, the main drivers and the targeted stakeholders is analysed in details. Integrated reporting is the current reporting standard where the sustainability strategy and activities are connected to financial reporting.
The concept of the conceptual framework can be regarded as recent in the field of business and accounting. In the past, people involved in the setting of accounting standards used to operate in the absence of conceptual frameworks. .
espite the fact that most companies need to give proper detail of their business in audited financial reports and other separate reports on sustainability, such efforts had failed to provide a detailed account of the performance of the companies (Everingham & Kana, 2008). It is
Corporate reporting can be regarded as the primary means through which the corporate entities can provide the details of their corporate performances to the stakeholders of the company (PwC, 2012). It has the ability to motivate the stakeholders to committee for
Integrated reporting was selected for assessment because it is an emerging concept and the underlying scope of research is relatively broad. Integrated reporting was primarily developed post corporate scandals in 2010 by
For that reason, any accounting conceptual framework, if properly adhered to, ought to reflect lists of qualitative characteristics that make sure financial reporting is provided to users with sufficient
The reaction towards the issues arising due to the defect in the conceptual framework is reactive in nature rather than proactive. Therefore the lack of proper and standard conceptual framework has increased the risk of inconsistency in the standard with each other and
7 pages (1750 words)Essay
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