REGULATORY FRAMEWORK IN ACCOUNTING
This framework was issued by the International Accounting Standards Board (IASB) to outline and explain the concepts underlying the preparation and presentation of financial statements for external users.
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The components of a set of financial statements include Statement of Financial Position, Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flow and Notes to the financial statements.
It should be noted that this framework is not an accounting standard and nothing in the framework overrides a specific accounting standard.
THE PURPOSE OF REGULATORY FRAMEWORK IN ACCOUNTING
The purpose of this framework is to
- Assist the IASB in the development of future accounting standards and in its review of existing accounting standards.
- Assist the IASB by providing a basis for reducing the number of alternative accounting treatments.
- Assist national standard-setting bodies in developing a national standard.
- Assist accountants to apply relevant accounting standards in preparing financial statement and in dealing with topics that do not form the subject of international accounting standards.
- Assist accountants in forming an opinion as to whether financial statements conform with relevant accounting standards.
- Assist users of financial statement in interpreting the information contained in financial statements prepared in conformity with International Accounting Standard.
ISSUES DEALT WITH IN THE FRAMEWORK
The specific topics discussed under the framework are as follows:
- The objectives of financial statements
- Users groups
- Assumptions underlying financial statement preparation
- Qualitative Characteristics of financial statement
- The elements of financial statements; their recognition and their measurement
- The concepts of capital maintenance
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