Another feature of principles is that they are not

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Unformatted text preview: Another feature of principles is that they are not fixed forever, they are not static, but rather they are dynamic. Principles are to be constantly evaluated as to meeting the set of assumptions, concepts, values and practices they are based on. In a dynamic world that set will change, hence the principles will change. The framework for financial reporting should describe that set of assumptions etc. Elaboration of the principles for the purpose of applying these to the various aspects of financial reporting is done in standards. Standards do not constitute new principles, but only give a description of the application of the principle. Principles are a basis for viewing reality. Inherently principles will fall short of being able to provide thru their application a perfect view of reality. Financial reports are no more than a model of the real world and as such their usefulness in reflecting reality is different for different aspects of that reality....
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