ICB RTAP Dissertation: Conceptual Framework for Financial Reporting

THE CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING



Dissertation



JEFFREY MORRIS DU PLESSIS

(ICB Member ID:880014)



Submitted in partial fulfilment of the requirements for the National Diploma:




FINANCIAL ACCOUNTING

(SAQA ID: 20366)




7 JUNE 2024



DECLARATION BY STUDENT:

I declare that this mini-dissertation submitted by me is my own work, that I have referenced
all the sources that I have used and that no part was previously submitted at any tertiary
institution.



Signature: Date: 07 June 2024

,
, DEDICATION

I dedicate this dissertation to my dad, Japhta Du Plessis , his girlfriend, Elizabeth Petersen
and my family whom supported me all these years that I have been studying.

A Special thanks are due to my late mother, Deonne Angeline Du Plessis who was the driving
force behind me becoming a fully qualified Financial Accountant and the first one in our
family

, Table of Contents
1.1 Overview of the Conceptual Framework for Financial Reporting in Accounting ............... 6

1.1.1 Objectives of Financial Reporting ............................................................................. 6

1.1.2 Qualitative Characteristics of Useful Financial Information........................................ 8

1.1.3 Elements of Financial Statements........................................................................... 10

1.1.4 Measurement Bases for Financial Reporting .......................................................... 12

1.1.5 The Overall Role of Financial Reporting ................................................................. 14

1.2 Positive International Critique ........................................................................................ 16

1.2.1 Enhancing Comparability and Consistency ............................................................. 16

1.2.2 Boosting Investor Confidence ................................................................................. 18

1.2.3 Facilitating Adoption of IFRS................................................................................... 20

1.2.4 Enhancing Economic Stability ................................................................................. 22

1.2.5 Encouraging Corporate Governance ...................................................................... 24

1.3 Negative International Critique ...................................................................................... 26

1.3.1 Theoretical Nature and Practical Challenges .......................................................... 26

1.3.2 Inflexibility in a Dynamic Business Environment ..................................................... 28

1.3.3 Emphasis on Investors Over Other Stakeholders ................................................... 30

1.3.4 Implementation Costs and Resource Constraints ................................................... 32

1.3.5 Complexity and Understandability........................................................................... 34

1.4 Practical Evidence......................................................................................................... 35

1.4.1 Enhanced Transparency and Accountability ........................................................... 35

1.4.2 Improvements in Financial Performance ................................................................. 37

1.4.3 Quality of Non-Financial Disclosures ...................................................................... 39

1.4.4 Risk Management and Sustainability Integration .................................................... 42

1.4.5 Empirical Evidence from Market Responses ........................................................... 44

1.5 Summary of International Recommendations ................................................................ 46

1.5.1 Continuous Refinement and Updates ..................................................................... 47

1.5.2 Enhanced Education and Training .......................................................................... 49