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Chapter 2

The IASB Conceptual Framework for

Financial Reporting (The ‘Framework’)

3.1 The Framework

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It is important that the IAS Standards and IFRS Standards published by the IASB
are consistent with the conventions and that the accounting standards are consistent
with each other. In order to help ensure that this occurs a framework was developed
within which all standards are developed and published. This document underpins all
accounting standards and provides the platform from which all future standards will
be developed.

The Framework deals with the fundamental issues in financial reporting and a brief
list of its contents is given below.

 The objective of financial statements – to provide useful information, such as
the statement of financial position and the statement of profit or loss to users.

 Underlying assumptions and qualitative characteristics – these are the
conventions discussed earlier, for example accruals, going concern, materiality,
prudence and recognition.

 The elements of financial statements – there are five main components to a
statement of profit or loss and statement of financial position – income,
expenses, assets, liabilities and capital.

 The measurement of profit and capital maintenance.

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