Comparative review of the Conceptual Framework’s structure

Abstract

This document is not part of IFRS but is directly related to them. The Conceptual Framework is rarely the main point when analyzing financial statements, and yet it is at the heart of every accounting standard ensuring consistency of terminology, recognition, and measurement (Rodgers, 2007). Everyone must learn this document before beginning to work with any IFRS or IAS. The Conceptual Framework contains a comprehensive set of concepts for presenting and preparing financial statements, creating and interpreting IFRS. In other words, the Conceptual Framework is the foundation of new accounting standards because this document resides in providing structure to the standard-setting process and to provide fundamental concepts and a common set of terms and premises that financial accounting standards are based upon (Gore and Zimmerman, 2007). The purpose of a Conceptual Framework for financial reporting is to ensure that financial accounting standards are “consistent with a unified theory of accounting” (Gore and Zimmerman, 2007, p. 30). Despite the stated importance of the Framework the accounting community could not have the one globally accepted framework. Given the purpose and importance of the Framework, a global Conceptual Framework could assist the IASB in achieving their mission “to develop a single set of high-quality, global accounting standards that are accepted worldwide” (Barth at al., 2008, p. 1161).