Dr Philip E Dunn
Readers will be aware that all EU companies listed on a regulated market
will be required to prepare their consolidated accounts in accordance with endorsed
International Accounting Standards from 2005 onwards.
The IASB – International Accounting Standards Board issued its framework
for the Preparation and Presentation of Financial Statements in 1989. This is
referred to as its conceptual framework. The framework sets out the concepts
that shape the preparation and presentation of financial statements for external
users. The framework does not have the status of an accounting standard as also
is the case with the ASB’s Statement of Principles. The IASB framework
assists the IASB:
- “In the development of future International Accounting Standards and
in its review of existing International Accounting Standards; and
- In promoting the harmonisation of regulations, accounting standards and
procedures relating presentation of financial statements by providing a basis
for reducing the number of alternative accounting treatments permitted by International
Accounting Standards.
In addition, the framework may assist:
- Preparers of financial statements in applying International Accounting Standards
and in dealing with topics that have yet to form the subject of an International
Accounting Standard;
- Auditors in forming an opinion as to whether financial statements conform
with International Accounting Standards;
- Users of financial statements in interpreting the information contained
in financial statements prepared in conformity with International Accounting
Standards; and
- Those who are interested in the work of IASB, providing them with information
about its approach to the formulation of accounting standards.”
To ensure the framework provides useful information it identifies a range
of user groups which include:
- Investors
- Lenders
- Employees
- Suppliers
- Other trade creditors
- Customers
- Government agencies; and
- The public
The framework comprises seven sections from paragraph 12-110 which cover
areas as:
- The objective of financial statements;
- Underlying assumptions;
- Qualitative characteristics of financial information;
- The elements of financial statements;
- Recognition of the elements of financial statements;
- Measurement of the elements of financial statements;
- Concepts of capital maintenance.
