1.%20Conceptual%20Framework - International Financial...

International Financial Reporting Standards
The views expressed in this presentation are those of the presenter,
not necessarily those of the IASB or IFRS Foundation.
© IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK.
Conceptual Framework
for Financial Reporting
Joint World Bank and IFRS Foundation ‘train
the trainers’ workshop hosted by the ECCB,
30 April to 4 May 2012
K
The views expressed in this presentation are those of the
presenter, not necessarily those of the IASB or IFRS Foundation.

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK.
Role of the Conceptual Framework
•
Conceptual Framework sets out agreed concepts that
underlie financial reporting
–
objective, qualitative characteristics, element definitions, …
•
IASB uses Conceptual Framework to set standards
–
enhances consistency across standards
–
enhances consistency over time as Board members change
–
provides benchmark for judgments
•
Preparers use Conceptual Framework to develop
accounting policies in the absence of specific standard or
interpretation
–
IAS 8 hierarchy
2
© IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK.

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK.
3
Objective of financial reporting
Provide financial information about the reporting entity
that is useful to existing and potential investors, lenders
and other creditors in making decisions about providing
resources to the entity
Note:
•
other aspects of the Conceptual Framework flow
logically from the objective (CF.OB1)
•
Conceptual Framework sets out the concepts that
underlie IFRS financial statements and assist the
IASB in the development of future IFRSs and in its
review of existing IFRSs (CF.Purpose and Status)
© IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK.

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK.
4
Objective of financial reporting
•
Investors’, lenders’ and other creditors’ expectations
about returns depend on their assessment of the
amount, timing and uncertainty of (the prospects
for) future net cash inflows to the entity.
–
Decisions by investors about buying, selling or holding equity
and debt instruments depend on the returns that they expect
from an investment in those instruments, eg dividends,
principal and interest payments or market price increases.
–
Decisions by lenders about providing or settling loans and
other forms of credit depend on the principal and interest
payments or other returns that they expect .
© IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK.

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK.
5
Objective of financial reporting
•
To assess an entity’s prospects for future net cash
inflows, existing and potential investors, lenders and
other creditors need information about:
–
the resources of the entity;
–
claims against the entity; and
–
how efficiently and effectively the entity's management