It fixes a standard of financial accounting which, when followed, ensures consistency in the financial statements of different companies. The financial statements of different companies must be able to satisfy the needs of a variety of users who mostly want to compare one company with another. When a standard is followed by all the companies, the financial statements become reliable for the users as they can safely compare all the companies and make important financial decisions. Accounting, therefore, entails a statement of accepted accounting rules. These rules form the structure of reference for the financial reporting. The conceptual framework forms the foundation for expansion of new accounting criteria and the assessment of those standards that are already in place. Further, it forms the basis for establishing which events should be accounted for and how the same should be released to the accountants (Macve 1987 p. 11). Functions of conceptual framework Conceptual framework lays out the objectives of the financial statements. Financial statements are meant to reflect the financial standing of institutions. Conceptual framework of accounting therefore offers the foundation and the guidelines that should be followed to reveal the economic situation of an institution at a given period of time. ...Show more
Developing a conceptual framework is an impossible possibility Name Institution Conceptual framework for accounting lies at the very base of financial accounting in the professional field. This is a component in accounting process developed to help accountants in carrying out their work…
Accounting plays a significant role in a business entity; it is prepared by the company to inform the public of the company’s performance and progress, which attracts more potential investors to the company to inject more capital and enhance the growth of the enterprise (Deegan and Unerman, 2009).
The conceptual framework provides guidance on the boundaries of financial accounting and other events related to it. The accounting conceptual framework was developed as early as 1970s. The Financial Accounting Standards Board (FASB) is in charge of developing and reviewing the frameworks.
It is the main persistence behind the development of accounting principles. The framework act as a backbone to the US based accounting standard GAAP (Generally Accepted Accounting Principles) for evaluation of existing and new development in accounting standards.
(Alexander, Britton and Jorissen, 2005)
Besides, the application of accounting standards is very different among the many nations of the world. For example, in the United Kingdom the ASB sets used the foundation for accounting needs for the rest of the public segment are also applied to both business and non business fields in the private sector.
The determination of conceptual framework projects' success parameters is necessarily based on the fact that they depend on a set of prior defined variables. Since variables are subject to change over the total duration of the project it's possible that CF projects would still be continued without abatement despite their above average failure rate, in some instances almost amounting to 92%.
According to the report the main root of this problem is the fact that the IASB outline applies to both private and public sector’s business entities whereas the FASB framework concerns both business with the exemption of the non-profit businesses in the private quarter. The application of accounting standards is very different among the many nations.
Accounting is also entails a statement of accepted accounting rules. This rule forms the structure of reference for the financial reporting. Out of the above statement therefore, conceptual framework forms the
The accounting conceptual framework was developed as early as 1970s. The Financial Accounting Standards Board (FASB) is in charge of developing and reviewing the frameworks. Conceptual frameworks have been constantly changed from them. However, individual organizations