International Accounting Standards Training Kit

Growing interest in establishing accounting rules by professional bodies began at the start of the second half of the last century, as there were no common scientific rules applied by practitioners of the accounting profession.

The Conceptual Framework

This is a consistent set of objectives, principles and concepts used by the standard-setter as a theoretical reference, from which its standards can be derived, thereby applying deductive normalisation, as opposed to normalisation derived from generally accepted practices. The process of preparing accounting standards without this framework can lead to standards that contradict and conflict with one another.

The Purpose of the Conceptual Framework

For the International Accounting Standards Board:

The framework serves as a guide that the Board follows in the process of issuing new standards and making amendments to existing standards, as well as in the process of addressing accounting matters that are not directly addressed by accounting standards and their interpretations.

For the Entity's Management:

In the absence of a standard or interpretation applicable to a particular transaction, management should use its personal judgement in establishing and applying an accounting policy consistent with the definitions, recognition criteria, and measurement concepts for assets, liabilities, income and expenses contained in the IFRS framework, which would lead to the production of information useful to decision-makers.

For Users of Financial Information:

Helping to interpret the information contained in the financial statements and understand the background on which it was prepared.