“A conceptual framework is a statement of principles providing generally accepted guidance for the development of new reporting practices and for challenging and evaluating the existing practices. “ (Weetman, 2003a) An accounting conceptual framework can be defined as: “a coherent system of inter-related objectives and fundamentals that should lead to consistent standards that prescribe the nature, function and limits of financial accounting and financial statements.” (Lynch, 1998) The International Accounting Standards Committee (now Board) published its conceptual framework in 1989. It is intended to guide both international and national standard setters when setting standards, and to assist prepares and auditors when interpreting standards or dealing with issues that the standards do not cover.
Table of Contents
- A) The Conceptual Framework
- 1. The Introduction
- 2. The Main Reasons
- 3. The Scope
- 4. The Aim
- 5. The Reason for the UK
- B) The Qualitative Characteristics of the Statement of Principles
- 1. The Introduction
- 2. The Characteristics
- 3. The Clash
- C) The Impact on the Standard Setting Process
- 1. The Introduction
- 2. Accounting Standard Definitions
- 3. Rule-based Approach
- 4. Principles-based Approach
- 5. The Conclusion
Objectives and Key Themes
This paper examines the introduction of the Statement of Principles as the UK's conceptual framework for accounting. It explores the reasons behind its adoption, its qualitative characteristics, and its impact on the standard-setting process, comparing rules-based and principles-based approaches. The paper aims to provide an understanding of the shift towards principles-based accounting in the UK and its significance in the context of international accounting practices.
- The development and adoption of a conceptual framework for accounting in the UK.
- Comparison of rules-based and principles-based accounting standards.
- The qualitative characteristics of the Statement of Principles.
- The impact of the Statement of Principles on the standard-setting process.
- The reasons for the UK's shift towards principles-based accounting.
Chapter Summaries
A) The Conceptual Framework: This chapter introduces the concept of a conceptual framework in accounting, defining it as a statement of principles guiding the development and evaluation of reporting practices. It discusses the main reasons for developing such a framework, including providing a basis for setting standards, resolving disputes, and establishing fundamental principles. The scope of the framework is delineated, encompassing general-purpose financial statements but excluding special-purpose reports. The chapter also outlines the aim of ensuring transnational comparability and transparency in financial reporting, identifying key user groups of financial statements. Finally, it explores the reasons for the UK's adoption of a conceptual framework, highlighting the increasing internationalization of accounting and the need to align with global practices.
B) The Qualitative Characteristics of the Statement of Principles: This section delves into the qualitative characteristics of the Statement of Principles, the UK's conceptual framework. It examines the specific characteristics that make financial statements useful and reliable, exploring potential conflicts between these characteristics and their implications for accounting practices. The section likely analyzes the trade-offs inherent in striving for different qualitative characteristics, such as understandability versus completeness, and the challenges in achieving a balance in financial reporting.
C) The Impact on the Standard Setting Process: This chapter analyzes the impact of the Statement of Principles on the UK's standard-setting process. It compares and contrasts rule-based and principles-based approaches to accounting standards, discussing their relative merits and drawbacks. The discussion likely examines how the shift to a principles-based approach affects the roles of preparers and auditors, emphasizing the increased importance of professional judgment and the need for economic substance over form in financial reporting. The chapter likely concludes with a discussion of the overall effects of this change on the quality and comparability of financial statements.
Keywords
Conceptual framework, Statement of Principles, Accounting Standards Board (ASB), rules-based accounting, principles-based accounting, financial reporting, qualitative characteristics, standard setting, international accounting, UK accounting, comparability, transparency.
Frequently Asked Questions: A Comprehensive Language Preview
What is the main topic of this document?
This document provides a comprehensive preview of a paper examining the introduction of the Statement of Principles as the UK's conceptual framework for accounting. It explores the reasons for its adoption, its qualitative characteristics, and its impact on the standard-setting process, comparing rules-based and principles-based approaches.
What are the key sections covered in the paper?
The paper is divided into three main sections: A) The Conceptual Framework, B) The Qualitative Characteristics of the Statement of Principles, and C) The Impact on the Standard Setting Process. Each section is further broken down into sub-sections.
What is the purpose of the "Conceptual Framework" section?
This section introduces the concept of a conceptual framework in accounting, explaining its purpose, scope, and the reasons for its development and adoption in the UK. It highlights the aim of achieving transnational comparability and transparency in financial reporting.
What does the section on "Qualitative Characteristics of the Statement of Principles" cover?
This section delves into the specific characteristics that make financial statements useful and reliable. It examines potential conflicts between these characteristics and their implications for accounting practices, analyzing the trade-offs involved in achieving a balance in financial reporting.
What is discussed in the "Impact on the Standard Setting Process" section?
This section analyzes how the Statement of Principles has affected the UK's standard-setting process. It compares rule-based and principles-based approaches, discussing their merits and drawbacks, and the impact on the roles of preparers and auditors. The effect on the quality and comparability of financial statements is also examined.
What are the key objectives and themes of the paper?
The paper aims to provide an understanding of the shift towards principles-based accounting in the UK and its significance internationally. Key themes include the development and adoption of a conceptual framework, the comparison of rules-based and principles-based accounting standards, the qualitative characteristics of the Statement of Principles, and its impact on the standard-setting process.
What keywords are associated with this paper?
Key words include: Conceptual framework, Statement of Principles, Accounting Standards Board (ASB), rules-based accounting, principles-based accounting, financial reporting, qualitative characteristics, standard setting, international accounting, UK accounting, comparability, transparency.
What is the intended audience for this document?
This document is intended for academic use, allowing for analysis of themes in a structured and professional manner.
Where can I find chapter summaries?
The document provides concise summaries for each of the three main chapters (A, B, and C), outlining the key topics and arguments covered within each section.
What is the overall contribution of this paper?
The paper contributes to a deeper understanding of the shift towards principles-based accounting in the UK, its underlying rationale, and its consequences for financial reporting practices and the standard-setting process.
- Citation du texte
- Carolin Becker (Auteur), 2005, The Conceptual Framework in the United Kingdom and the Introduction of the Statement of Principles, Munich, GRIN Verlag, https://www.grin.com/document/37091
