Solutions to Gripping IFRS: Graded Questions The framework Kolitz and Sowden-Service, 2009Chapter 2: Page 1 Solution 2.1 In order for financial statements to be reliable, they should: not include material error or bias; be a faithful representation; show the substance rather than the legal form of the transaction; be neutral; be prudent (but not to the extent that reserves become hidden); and be complete (within the confines of materiality and cost).
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Solutions to Gripping IFRS: Graded Questions The framework Kolitz and Sowden-Service, 2009Chapter 2: Page 2 Solution 2.2 The framework is not an International Financial Reporting Standard [paragraph 2 of framework]. Faithful representation forms part of the discussion of reliable information (qualitative characteristic) of useful information as addressed in the framework. IAS 1 p13 states that fair presentation requires faithful representation of transactions and elements as defined in the framework. As a result, IAS 1, p13, therefore requires a user to incorporate the principles set out in the framework (although it is not an IFRS) as well as the definitions of the elements, so as to achieve fair presentation.