Conceptual Framework for Financial Reporting

Requires the Board to formally add it to the agenda and develop the amendment through a specific process.

To create financial reporting standards that improve transparency, accountability, and efficiency for global markets.

Enhancing international comparability and quality of financial information, empowering informed decisions by investors and market participants.

Reduces gaps in information between capital providers and those entrusted with their funds, enabling better management oversight.

Helps investors identify risks/opportunities globally, leading to improved capital allocation. For businesses, single language lowers costs.

Reports providing financial information, useful primarily for investors, lenders, and creditors, based on estimates and judgements.

Existing and potential investors, lenders, and other creditors who depend on general purpose financial reports for financial info.

Information about a company's economic resources and the claims against it, shown in financial reports.

A company's assets, what it owns and controls that have future economic value.

Debts and obligations of a company. What it owes.

Activities that change the economic resources & claims of a company.

The basis for most financial reports; not exact values, rather estimates of a company's position.

The guiding principles behind financial report estimates, judgements, and models, establishing ideal reporting standards.

A liability's recognition doesn't automatically require the recognition of an equivalent asset, different criteria or measurement requirements may be applicable to ensure relevant information.

An obligation arising from an entity’s customary practices, publicized policies, or statements, if the entity cannot practically act otherwise.

An entity's obligation to transfer resources is dependent on future actions (e.g., operating a business on future dates).

Financial statements prepared assuming the entity will continue operating, meaning the entity cannot practically avoid a transfer.

An entity's ability to avoid a transfer depends on economic consequences of such actions. Adverse consequences may outweigh benefits.

Obligations established by contract, legislation, or similar means.

Specific Rules outlining the conditions and procedures to recognize liabilities and assets

Different rules for recognizing liabilities versus the corresponding assets, if those different criteria are meant to select most relevant information that accurately represents the event.

A present obligation arises when new legislation requires an entity to transfer an economic resource due to obtaining economic benefits or taking an action related to that legislation.

A present obligation arises when an entity's customary practice, published policy, or specific statement requires them to transfer an economic resource due to obtaining economic benefits or taking an action related to those practices.

A present obligation can exist even if the actual transfer of economic resources is scheduled for a future date.

A contract where both parties have a combined right and obligation to exchange future goods or services.

An entity has a present obligation when it has obtained economic benefits or taken an action that requires it to transfer an economic resource it wouldn't otherwise have to.

An entity doesn't have a present obligation if it hasn't yet met the criteria to transfer an economic resource, such as obtaining benefits or taking related actions.

A company doesn't have a present obligation to pay an employee's salary until it receives the employee's services.

A present obligation exists when the entity has already received benefits or taken action that creates a financial commitment, while an executory contract represents a future exchange of goods or services.

A specific right, obligation, or group of rights and obligations used to apply recognition and measurement concepts.

To determine the appropriate recognition and measurement methods for assets, liabilities, income, and expenses. It helps to ensure that information is relevant.

It's possible to use one unit of account for recognition and another for measurement. For example, a contract may be recognized individually, but its value measured as part of a portfolio.

If a part of an asset or liability is transferred, the unit of account may change. The transferred and retained parts become separate units.

The chosen unit of account should provide useful information about assets and liabilities, including related income and expenses.

Treating a group of rights and obligations as a single unit can be more relevant if they cannot be separated, have similar risks, or are used together to generate cash flows.

If rights and obligations cannot be the subject of separate transactions, they might be treated as a single unit of account.

Rights and obligations with similar expiration patterns might be grouped together as a unit of account.

Financial information accurately reflects the substance of transactions and events, even if the form differs.

The cost of providing financial information should be weighed against the benefits it provides to users.