Bridging Gap between IAS 1 and IASB Conceptual Framework on Users of Financial Statements

Abstract

International Accounting Standard (IAS) 1 – Presentation of Financial Statements contradicts International Accounting Standards Board (IASB) Conceptual Framework on the users of financial statements. IASB Conceptual Framework is superior to all international accounting standards and clearly specifies investors, creditors and lenders as principal users of financial statements while IAS 1 states that financial statements are produced for unlimited number of users. There is thus a gap in presentation of financial statements as pertinent information required by principal users of financial statements is not easily accessible in financial statements prepared under IAS 1. This paper therefore evaluates the specific objectives of financial statements in context of principal users of financial statements in accordance with IASB Conceptual Framework and develops Investment Matrix as well as Creditors and Lender Matrix. The recommendations of this paper are that IAS 1 should be rephrased to prioritise the objectives of the principal users of financial statements.