Do you need this or any other assignment done for you from scratch?
We assure you a quality paper that is 100% free from plagiarism and AI.
You can choose either format of your choice ( Apa, Mla, Havard, Chicago, or any other)
NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.
NB: All your data is kept safe from the public.
The Reason for a Conceptual Framework in Accounting
Thesis
In this presentation, I argue that a conceptual framework in accounting is aimed more at protecting the accounting profession than at the improvement of accounting practice. There are three critical arguments to prove the thesis. Firstly, the framework is ambiguous rather than precise. Secondly, it is descriptive rather than prescriptive. Finally, in the rare cases when an accounting standard contradicts the conceptual framework, the principles of the former are taken into consideration instead of the principles of the latter.
Ambiguity and Vagueness
The Conceptual Framework allows for an alternative interpretation of the principles. This fact prevents the framework from the improvements in accounting practice. More precisely, even though the concepts of prudence and measurement uncertainty were reintroduced, they still vague. The clarifications on the measurement uncertainty provided by IFRS (2018) still do not bring any precise regulations, recommendations, or rules for understanding and measuring it.
Descriptions Instead of Prescriptions
It could be suggested that to lead to improvements in accounting practice, the framework should consist of precise normative regulations. On the contrary, the conceptual framework reflects what information in the financial statements should look like to be useful. The framework recommends that is should be understandable, relevant, and verifiable (IFRS, 2018). In other words, this point has a lot in common with the previously described one and means that the framework lacks certainty and clarity to be indeed useful.
Accounting Standards VS. Conceptual Framework
Deloitte (2013) informs that according to the Conceptual Framework discussion paper, in case of contradictions between accounting standards and the framework, the former will always dominate the latter. This means that the Conceptual Framework is less powerful than standards and the recommendations of the framework are more advisory in nature. This way, it could be suggested that for the Conceptual Framework to be more practical, it should be more authoritative.
Counterargument: Technical Benefits
In spite of the arguments mentioned above, it still should be noted that the Conceptual Framework was initially aimed at the improvement of the practice of accounting. Therefore, all the statements, definitions, concepts, and rules written there directly or indirectly serve this goal. Applying IFRS (2018) states that the Framework plays a significant role in clarifying standards and the development of consistent accounting policies. From this, it could be inferred that it improves accounting practices by the elimination of inconstancies and possible misunderstandings.
Conclusion
In conclusion, it should be noted that the arguments above prove that a conceptual framework in accounting has more to do with protecting the accounting profession than improving accounting practice. In fact, it seems the Framework makes people believe that the accounting profession is immensely important and goes beyond providing audit services. Undoubtedly, in certain cases the utilization of the framework is inevitable since it clarifies how to perform accounting practices. Nevertheless, in order to cause real improvements in the accounting practice, the Framework should be even more precise, less advisory, and resemble strictly clarified set of standards.
References
AASB Invitation to Comment (2018). Consultation paper: Applying the IASBs revised Conceptual Framework and solving the reporting entity and special purpose financial statement problems. Australia Accounting Standards Board.
Applying IFRS (2018). IASB issues revised Conceptual Framework for Financial Reporting. Web.
Deloitte (2013). Conceptual Framework Purpose and status (IASB). Web.
IFRS (2017). Who we are. Web.
IFRS (2018). IFRS® Conceptual Framework Project Summary. Web.
Do you need this or any other assignment done for you from scratch?
We assure you a quality paper that is 100% free from plagiarism and AI.
You can choose either format of your choice ( Apa, Mla, Havard, Chicago, or any other)
NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.
NB: All your data is kept safe from the public.