The main objective of the conceptual framework was to build up a steady set of accounting standards and to solve accounting controversies. However, considerable amount of issues were recognised in the framework and as a result, development of a converged framework was proposed so that problems and conflicts among similar individual frameworks can be resolved (Pearson Education, n.d.). The paper discusses role of the conceptual framework in financial reporting and examine the issues that has been recognised thereof.
The framework is responsible for assisting the board in promotion of synchronisation among various accounting standards, procedures and regulations so that efficiency is brought in financial statement preparation and presentation.
The framework was delivered official responsibility of determining objective financial responsibility, its qualitative characteristics and usefulness and the definition, measurement and recognition of various elements in a financial statement.
The framework acts as a guideline for assisting auditors in developing an opinion regarding robustness of financial statements with respect to the standards defined by IASB. Additionally, it delivers ease of understanding and interpreting the financial statements to its users (AASB, 2010).
It was determined that the existing conceptual framework has been significantly helpful to the IASB in developing and building further amendments in International Financial Reporting Standards (IFRS). However, the conceptual framework remained largely unchanged since incorporation and recently, IASB recognised certain issues in the existing framework that has been discussed as follows:
The board identified that a number of important areas has not been covered in the existing conceptual framework. For instance, the framework provide negligible amount of guidance regarding identification, disclosure, measurement and presentation of reporting entity. Guidance in a number of areas