IASB improved conceptual framework for financial reporting Essay

IASB improved conceptual framework for financial account - Essay Example efficacious entities of different types of ownership are obliged to comply with regulations in financial reporting, stated in the national accounting standards. But the current process of sparing and business sphericisation caused the necessity of a common set of standards that could be applied in many countries, providing the consistency and uniformity of accounting and financial reporting throughout the world.Thus, in 2001 the special International Accounting Standards Board (IASB) has been established in the UK in order to design standards, intended to attain a global acceptance. If a company complies with the international accounting standard, it will likely achieve a faithful representation of its financial performance as well as it will provide the basis for analysis of the companys position on the global market and further prospects for development of its business. Such information is exceedingly usef ul for different stakeholders helping them to make better decisions concerning the company. The decision-usefulness approach in accounting has been known even from the 1930-40s. Currently it is laid at the heart of the abstract framework of Financial Reporting, which is being developed by the IASB in collaboration with the US Financial Accounting Standards Board (FASB). This essay is aimed to analyse critically the IASBs Framework, in particular, regarding the quarrys of financial reporting and qualitative characteristics of financial reporting information. ... at that time conceptual frameworks with a common standard, which was intended to be sound, comprehensive, and internally unvarying (IASB, 2006. p.8). Boards were primarily motivated by two objectives firstly, to provide convergence of existing frameworks, and, secondly, to secure an improvement of the decision-usefulness approach in financial reporting. The fundamental principles of the new intention were adopted from s everal previous documents. A monograph A Statement of Basic Accounting Theory, published in 1966 by the American Accounting Association, punctuate that information ensuing from a process of accounting is more important than the process itself it defined an accounting as identifying, measuring, and communicating economic information to suffer informed judgements and decisions by users of the information. (Lewis & Pendrill, 2004, p. 3) Another important document, which has begun to refocus the accounting policy from stewardship to providing information useful for various stakeholders, is the Trueblood Committee report Objectives of Financial Statements (1973). It formulated an objective of financial statements as to provide information useful to investors and creditors for predicting, comparing, and evaluating potential cash flows to them in terms of amount, timing, and related uncertainty (Zeff, 1999, p. 100). In July 2006 the first concept of IASB Framework was published in the fo rm of a Discussion Paper. It defines the objective of financial reporting as to provide information that is useful to present and potential investors and creditors and others in making investment, credit, and similar resource allocation decisions (IASB, 2006, p.18, OB2). This objective could be achieved if provided information