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
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
