Abstract
This chapter examines the objectives and qualitative characteristics of financial reporting currently prescribed by accounting standard-setters in their conceptual framework (CF). The CF is that of the International Accounting Standards Board (IASB 2010). In 2002, following accounting scandals and a Securities and Exchange Commission proposal for principles-based accounting standards (PBAS), the Financial Accounting Standards Board (FASB) in the US and the IASB agreed to harmonise their CFs and PBAS (FASB 2002a and 2002b).1 Although the project is incomplete,2 that part relating to the objective and qualitative characteristics of financial reporting is contained in identical statements from the FASB (2010) and the IASB (2010). This chapter initially considers the nature and role of the CF and issues relating to it. The objective and qualitative characteristics in IASB 2010 are then outlined and assessed using research published predominantly since the 2002 harmonisation agreement. Accounting for economic reality is particularly emphasised.
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