Conceptual_framework_slides

Conceptual_framework_slides - Conceptual framework...

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Conceptual framework
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Conceptual framework Page 2 Executive summary The development of the Conceptual Framework is one of the most critical aspects in the transition to IFRS as standards may become more principles based and less prescriptive in nature. In this type of environment, the foundation of a sound Conceptual Framework becomes even more essential. The Boards have developed Conceptual Frameworks that identified and defined the expected users of financial statements, the qualitative characteristics that financial statements should strive to achieve, the elements of financial statements (e.g., assets, liabilities, equity, etc.), the recognition and measurement of those elements and the actual financial statements that users will require. The Frameworks are very similar in nature, contain definitional differences and emphasize certain subjects within each concept. The main differences focus on the qualitative characteristics emphasized by the IASB of substance over form, accrual basis of accounting and the going concern concept. The IASB has also emphasized the capital maintenance concept, while the FASB has emphasized the use of the cash flow statement and the present value principles.
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Conceptual framework Page 3 Executive summary Through the Norwalk Agreement and convergence projects, the Boards are beginning to converge concepts. They are doing this in eight phases. The currently active phases are: Objective and qualitative characteristics: A final pronouncement is expected in the second quarter of 2010. Elements and recognition: The Boards will reconsider the liability definition phase of the project. Measurement: The Boards are developing a Preliminary Views document. Reporting entity: The ED comment period ends in July, 2010. The convergence process will be time consuming considering the challenges of a process dealing with definitional differences and the effects of past accounting pronouncements.
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Conceptual framework Page 4 Primary pronouncements US GAAP SFAC No. 1, Objectives of Financial Reporting by Business Enterprises SFAC No. 2, Qualitative Characteristics of Accounting Information SFAC No. 5, Recognition and Measurement in Financial Statements of Business Enterprises SFAC No. 6, Elements of Financial Statements SFAC No. 7, Using Cash Flow Information and Present Value in Accounting Measure IFRS IASB , Framework for the Preparation and Presentation of Financial Statements IAS 8 , Accounting Policies, Changes in Accounting Estimates and Errors
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Conceptual framework Page 5 Overview Objectives FASB Useful to investors and creditors Assessing cash flow Economic resources IASB Meets needs of most investors Present financial position, performance and changes in financial position Stewardship of management
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Conceptual framework Page 6 Overview Qualitative characteristics FASB Understandability Relevance: Predictive and feedback value Timeliness
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Conceptual_framework_slides - Conceptual framework...

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