Financial reports are prepared for users who have a reasonable knowledge of business and economic activities and who review and analyse the information with diligence.
Comparability enables users to identify and understand similarities in, and differences among, items.
However, these are not considered a primary user and general purpose financial reports are not primarily directed to regulators or other parties. To be useful, financial information must not only be relevant, it must also represent faithfully the phenomena it purports to represent.
Thus, the financial statements presume that an entity will continue in operation indefinitely or, if that presumption is not valid, disclosure and a different basis of reporting are required. Verifiability means that different knowledgeable and independent observers could reach consensus, although not necessarily complete agreement, that a particular depiction is a faithful representation.
Reporting such information imposes costs and those costs should be justified by the benefits of reporting that information.
Qualitative characteristics of useful financial information The qualitative characteristics of useful financial reporting identify the types of information are likely to be most useful to users in making decisions about the reporting entity on the basis of information in its financial report.
The elements directly related to financial position balance sheet are: Faithful representation means representation of the substance of an economic phenomenon instead of representation of its legal form only. However, enhancing qualitative characteristics either individually or collectively cannot render information useful if that information is irrelevant or not represented faithfully.
The qualitative characteristics apply equally to financial information in general purpose financial reports as well as to financial information provided in other ways. They will need to consider pertinent information from other sources as well.
These broad classes are termed the elements of financial statements. Prudence is the exercise of caution when making judgements under conditions of uncertainty.
It can be a single entity or a portion of an entity or can comprise more than one entity. The usefulness of financial information is enhanced if it is comparable, verifiable, timely and understandable.
Financial information is capable of making a difference in decisions if it has predictive value, confirmatory value, or both. As the project to revise the Framework progresses, relevant paragraphs in Chapter 4 will be deleted and replaced by new Chapters in the IFRS Framework.
The predictive value and confirmatory value of financial information are interrelated. A reporting entity is not necessarily a legal entity. The IASB will consider whether different sizes of entities and other factors justify different reporting requirements in certain situations.
Users need to be able to distinguish between both of these changes. Information about the claims and payment requirements assists users to predict how future cash flows will be distributed among those with a claim on the reporting entity. This information indicates how the entity obtains and spends cash, including information about its borrowing and repayment of debt, cash dividends to shareholders, etc.
While some phenomena are inherently complex and cannot be made easy to understand, to exclude such information would make financial reports incomplete and potentially misleading.Conceptual Framework: Recognition.
Project Description: The objective of this project is to develop recognition criteria for whether information should be reported in state and local governmental financial statements and when that information should be reported.
This project ultimately will lead to a Concepts Statement on recognition of elements of.
Example of Conceptual Framework February 11, admin One needs to build a theory by using an inductive model of thinking with logic as in grounded theory as Strauss and Corbin () suggested that the development of a theory is the culminating aspect of the study grounded in data gathered.
The Conceptual Framework (or “Concepts Statements”) is a body of interrelated objectives and fundamentals. The objectives identify the goals and purposes of financial reporting and the fundamentals are the underlying concepts.
A Sample of Conceptual Framework with Statement of the Problem January 19, Alvior, Mary G. 27 Comments This article shows how a conceptual framework, along with the corresponding statement of the problem, is organized and written in a dissertation.
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A conceptual framework is a bit like a recipe or a blueprint. It provides an outline of how you plan to conduct the research for your thesis, but it goes further than that by also positioning your work within the larger field of research.Download