2.2 The need for a conceptual framework

Question 1

Why are conceptual frameworks important in setting accounting standards?

Answer 1

Otherwise, standards tend to be produced in a haphazard way.

Question 2

Why would accounting standards developed from conceptual frameworks be less subject to political interference?

Answer 2

Because the conceptual frameworks are less open to criticism as they are internationally accepted.

Question 3

Why might standards based on a single conceptual framework be problematic?

Answer 3

They may not suit all users given the diversity of user’s requirements.

Question 4

Why are conceptual frameworks problematic where accounting standards need to be applied to a range of different purposes?

Answer 4

A single conceptual framework will not be able to cater to a range of standards with different purposes.

Question 5

Do conceptual frameworks make it easier to set accounting standards?

Answer 5

Not necessarily, as they may can create limitations.

Question 6

What key matters foes the IASB’s 2018 conceptual framework deal with?

Answer 6

1 Objectives and purpose of reporting
2 Qualitative characteristics determining the useful of information in financial statements
3 Financial statements and the reporting entity
4 Recognition, derecognition and measurement of the elements from which statements are constructed
5 Presentation and disclosure
6 Capital and capital maintenance.

Question 7

What are the purposes of the IASB Conceptual Framework?

Answer 7

1 Assist in development of IFRS
2 Prevent alternative accounting treatments
3 Assist national bodies in setting standards
4 Assist accountants in preparing statements
5 Assist in auditors in forming opinions
6 Assist users in interpreting statements

Question 8

If an IFRS conflicts with the IASB Conceptual Framework, which takes precedence?

Answer 8

The IFRS