Concept
ual
Role of the CF
• Sets out agreed concepts that underlie financial reporting
• IASB uses CF to set standards:
– Enhances consistency across standards;
– Enhances consistency over time as Board members change
– Provides benchmark for judgement
• Preparers use CF to develop accounting policies in absence of specific
standards or interpretations
Assumptions of the CF
• Recoverable historical cost and nominal financial capital maintenance concept
• CF applies to a range of accounting models and capital maintenance concepts
Status of the CF
Not an IFRS but a basis for all IFRSs
Chapter 1: The Objective of General Purpose Financial Reporting (GPFR)
Objective:
To provide
• financial information
• about the reporting entity
• that is useful
• to existing and potential investors, lenders and other creditors
• in making decisions
• about providing resources to the entity.
, The Users of Financial Statements
Decision usefulness
Primary users: Existing and potential
Investors Providing resources to the entity Lenders and other creditors
Buying, selling or Providing or settling loans or
holding equity and debt other forms of credit
instruments
Returns: Payment of principal and
Dividends, increases in interest
prices
Decisions the users undertake
ual
Role of the CF
• Sets out agreed concepts that underlie financial reporting
• IASB uses CF to set standards:
– Enhances consistency across standards;
– Enhances consistency over time as Board members change
– Provides benchmark for judgement
• Preparers use CF to develop accounting policies in absence of specific
standards or interpretations
Assumptions of the CF
• Recoverable historical cost and nominal financial capital maintenance concept
• CF applies to a range of accounting models and capital maintenance concepts
Status of the CF
Not an IFRS but a basis for all IFRSs
Chapter 1: The Objective of General Purpose Financial Reporting (GPFR)
Objective:
To provide
• financial information
• about the reporting entity
• that is useful
• to existing and potential investors, lenders and other creditors
• in making decisions
• about providing resources to the entity.
, The Users of Financial Statements
Decision usefulness
Primary users: Existing and potential
Investors Providing resources to the entity Lenders and other creditors
Buying, selling or Providing or settling loans or
holding equity and debt other forms of credit
instruments
Returns: Payment of principal and
Dividends, increases in interest
prices
Decisions the users undertake
