Study Of The Conceptual Frameworks Accounting Essay Example For Students

Study Of The Conceptual Frameworks Accounting Essay From the historical position, the building of a fiscal accounting conceptual model is to better the quality of accounting criterions system. As the accounting profession entered the 1970s, the criterion compositors have found it hard to decide peculiar accounting issues, So they have sought to build a conceptual model which could be used to underpin accounting criterions and to supply counsel to practicians in countries where no accounting criterion exists. ( Richard Lewis David Pendrill, p6 ) The FASB CF The earliest research about the CF was created in the USA. In 1973, the Financial Accounting Standards Board ( FASB ) replaced the much-criticized Accounting Principles Board ( APB ) and made a comprehensive sum-up of the old accounting standard-setting organic structures experiences and lacks. The CF is supposed to incarnate a coherent system of interconnected aims and basicss that can take to consistent criterions and that prescribes the nature, map, and bounds of fiscal accounting and fiscal statements. ( FASB 1976b, p.2 ) During the late seventiess and the early 1980s the FASB began a series of Statements of Financial Accounting Concepts ( SFAC ) which were intended to be the edifice blocks of the Board s conceptual model. ( Stephen A. Zeef Thomas F. Keller, p77-79 ) Includes: No.1 Objectives of Financial Reporting by Business Enterprises ( November 1978 ) , No.2 Qualitative Characteristics of Accounting Information ( May 1980 ) , No.6 ( Replaced SFAC No.3 ) Elementss of Fis cal Statements ( December 1985 ) , No.5 Recognition and Measurement in Financial Statements of Business Enterprises ( December 1984 ) and No.7 Using Cash Flow Information and Present Value in Accounting Measurement ( February 2000 ) . So FASB is an of import drive force of the outgrowth of CF in a series of inevitable and inadvertent factors. Compare with the authorities bureaus, FASB is still a portion of the accounting profession. Therefore, the U.S. accounting profession plays an of import function in advancing CF. Though it s non a perfect papers, it is capable of being improved and plays an of import function in more consistence and comparison criterions puting. The IASC model The IASC, with members drawn from some 100 states, published its Model for the Preparation and Presentation of Financial Statements in July 1989. Compared with the FASB s SFAC, there are two add-on subdivisions on Underlying Assumptions and Concepts of Capital and Capital Maintenance . However, this model is non the utile one, since there s no counsel on which should be selected for any given component recognized. The ASB Statement of Principles The ASB has been committed to the development of Statement of Principles for Financial Reporting since its formation in 1990 and issued Financial Reporting Standards ( FRSs ) based upon the Statement of Principles in June 1993. The aim of this Statement of Principles is to supply a model for the consistent and logical preparation of single accounting criterions. The model besides provides a footing on which others can exert judgement in deciding accounting issues. ( Richard Lewis David Pendrill, p12 ) The ASB besides issued 15 FRSs in absence of such an in agreement Statement of Principles. Other states Californium In Australia and New Zealand the CF has besides been developed following the FASB CF closely. Obviously, there will be many advantages after puting a CF. It was said that While the pursuit for a conceptual model or general theory is of import in placing inquiries that need to be answered, it would be idle to trust that such a model could be developed that would give expressed counsel on practical jobs. ( Richard Macve, 1981. ) We can reason that the outgrowth of CF is an institutional changing procedure and there issue imposed constrains by jurisprudence when fixing accounting criterions. Outline1 The relationship between the current IASB/FASB attack and constructs of rating and economic income2 Reporting comprehensive income3 Decision4 Bibliography The relationship between the current IASB/FASB attack and constructs of rating and economic income The FASB and IASB s articulation undertaking is primary to meeting the two Boardss bing models into a common model that they can utilize in developing new and revised accounting criterions. Their frameworks focal point on enterprise resources, claims to those resources, and alterations in them ( p.3 ) and the definitions of the elements of Financial Statement are consistent with an plus and liability position, in which income is a step of the addition in the net resources of the endeavor during a period, defined chiefly in footings of additions in assets and lessenings in liabilities. So the assets becomes the conceptual primacy that all other elements can be derived from it. To advance consistence within histories, avoid mismatch jobs and better comparison across entities, the joint undertaking attempted to place the individual measuring footing which conforms to the CF s standards such as relevancy and dependability. The bases are pure bases of measuring such as historical c ost, replacing cost, value in usage or just value. Social Issues in Judith Wrights work EssayI agreed with the staff s sentiment that the modified individual statement attack provides the best layout of information for users and is a positive measure to improved fiscal coverage. As stated, the Boards aim to develop a individual criterion is to use loosely to all entities. They should foremost develop a criterion that can use to entities other than fiscal establishments, and so see the application of such a criterion to fiscal establishments. ( IASB Agenda Project ) The IASB s public presentation coverage is to abandon the via media which does non desire to abandon the gross realisation regulation, but besides to reflect alterations in value, to comprehensively and transparently reflect the concern economic activities and to extinguish the chances of pull stringsing the income coverage by agencies of amortisation and etc. Problems However, as the nucleus of the undertaking, the comprehensive income s ideal content is confronting many troubles: First, to accomplish a individual statement for describing comprehensive income demands, there will hold a demand of important alterations for accounting pattern. It s non easy to carry through the development of the present basic rules and even the basic constructs of accounting really shortly. Second, the ideal content of comprehensive income is to fling the rule of income realisation and disbursal matching. So the corresponding historical cost rule will fall in every bit good. Not to advert that these rules have long been accept, it can non be easy to do categorization of the income statement which can show as the specific impact factors of alterations of what happened on the assets, liabilities and the FV between the different day of the month of statement. For illustration, harmonizing to the G4 +1 , the study of comprehensive income includes consequences of opera tions, finance and other fiscal activities and the consequences of other losingss and net incomes. ( Discussion about Comprehensive Income ) So when a series of the realisation rules are abandoned, if the construct of realisation would go on to survival? Third, the utility of the information provided in the statement of Comprehensive Income must transcend the Statement of net income and loss in order to acquire the support of the users and be able to be. Furthermore, there are still more jobs should be resolved before implement of the individual statement of comprehensive income, for illustration, whether to re-define the component of the current fiscal statements and whether the gross and disbursals position should go on to be, etc. Decision As discussed above, the CF and its relevant facets are now being as a land of debating issues. The IASB/FASB articulation undertaking did supply some better picks and solutions, but due to the dynamic economic environment and uncomplete progressive market, it is still hard to accomplish convergence. Among the different attacks and sentiments, more betterments should be made based on the constructs and conventions to supply more utile information to a broad scope of users in the long tally. Bibliography Discussion about Comprehensive Income, viewed 7th December, 2009, A ; lt ; hypertext transfer protocol: //www.docin.com/p-13418949.html # documentinfo A ; gt ; Fiscal Accounting Standards Board ( 1976b ) , FASB Discussion Memorandum, Conceptual Framework, Scope and Implications of the Conceptual Framework Project, p.2 Fiscal Accounting Standards Board ( 1979 ) , Statement of Financial Accounting Standards No. 89, Financial Reporting and Changing Prices, FA Fiscal Accounting Standards Board ( FASB ) . 1999. Preliminary Positions on Major Issues Related to Reporting Fiscal Instruments and Certain Related Assets and Liabilitiess at Fair Value. Norwalk, CT: FASB. Ganesh M. Pandit and Jeffrey J. Phillips, Comprehensive Income: Reporting Preferences of Public Companies, viewed5thDecember,2009, A ; lt ; hypertext transfer protocol: //www.nysscpa.org/cpajournal/2004/1104/essentials/p40.htm A ; gt ; Harry I. Wolk, James L. Dood, John J. Rozycki, Accounting Theory, Conceptual Issues in a Political and Economic Environment, p393 IASB Agenda Project, Reporting Comprehensive Income ( Performance Reporting ) , viewed5thDecember,2009, A ; lt ; hypertext transfer protocol: //www.iasplus.com/agenda/perform.htm A ; gt ; Nair, R.D. , and Jerry J.Weygandt ( November 1981 ) . Let s Fix Differed Taxes, Journal of Accountancy, pp.87-102 Richard Lewis David Pendrill, Advanced Financial Accounting ( 6th edition ) , p6, p12 Richard Macve, A Conceptual Framework for Financial Reporting: The Possibilities of an Agreed Structure, ICAEW, London, 1981 Stephen A. Zeef Thomas F. Keller, Financial Accounting Theory, p77-79 Zeff, S. A. , Forging Accounting Principles in Five States. Journal of Accountancy ( December 1978 ) , pp. 57-59