According to dictionary “concepts” means ideas; or generalized notions or views or impressions.
Applying to Accounting, Accounting Concepts would refer to abstract ideas or assumptions which sets, governs, regulates and standardizes practices in the accounting world.
When we look at a dictionary to know what is meant by principles, we’ll encounter words like doctrines, beliefs, dogmas, philosophies, creeds and similar words.
In Accounting, there is the so-called Generally Accepted Accounting Principles or GAAP. These GAAPs are the doctrines, creeds, dogmas we apply and follow in the accounting practice... read more
Financial Reporting Standards (IFRS-PFRS) are based on a Framework, which addresses the concepts underlying the information presented in general purpose financial statements.
The Framework also provides a basis for the use of judgement in resolving accounting issues.
Financial Reporting Standards sets out recognition, measurement, presentation and disclosure requirements dealing with transactions and events that are important in general purpose financial statements.
However, it is important to note that the framework provides structure and direction to financial accounting and reporting and does not directly prescribe GAAP. It provides underlying foundation for accounting standards.
Although the Framework sets out the concepts that underlie the preparation and presentation of financial statements for external users, the Framework is not an International Financial Reporting Standards and hence does not define standards for any particular measurement or disclosure issue.
Be reminded that IASB recognizes that there may be a conflict between the Framework and IFRS. In those cases where there is conflict, the requirements of the IFRS prevail over those of the Framework.
Take note that the Framework is being introduced here for us to learn and study the basic concepts of financial accounting and reporting which are basically the fundamentals of accounting.
Scope of the Framework
The Framework deals with the following:
- Definition, Recognition and Measurement of the elements of Financial Statements
Concern of the Framework
The framework is concerned with general purpose financial statements.
Such financial statements are prepared and presented at least annually and are directed towards the common information needs of a wide range of users.
Many users have to rely on the financial statements should, therefore, be prepared and presented with their needs in view.
DIAGRAM OF CONCEPTUAL FRAMEWORK
Researched by:
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