International Financial Reporting Essay Example | Topics and Well Written Essays - 2750 words

International Financial Reporting - Essay Example It is expected that the framework would assist the IASB in not only developing new international accounting standards, but also in the revision of the existing ones. It may also help in reducing the many alternative accounting treatments which are outlined by various accounting standards and regulations (Pounder, 2009). The conceptual framework presents key issues relating to the preparation and presentation of the financial statements. These include objectives, underlying assumptions, qualitative characteristics, recognition and measurement of elements of the financial statements, and the concepts of capital management. Though there are other ways measuring the elements of the financial statements, â€Å"historical cost† is the most commonly used by entities. This basis renders accounting information of less value in the prediction of future performances of the entities. Before the introduction of a conceptual framework, the accounting system could be said to have been â€Å"rule based†, governed by rules on how to treat each and every transaction. Such a system was inflexible and rigid but it promoted excellent comparison of financial performances. Contrastingly, the introduction of a conceptual framework which is â€Å"principle based† has led to the development of accounting standards from a generally accepted conceptual basis with clear and specific objectives. It could be argued that the conceptual framework ensures that the information in the financial statements present a â€Å"true and fair view† financial position of the entity. This means that based on the management estimates and judgment, the financial information presented is fairly accurate. It could also be taken to mean that the financial information does not have material errors, and the users of such information can used it to make meaningful decisions. It is also worth