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An extensive consultation paper has been provided to you related to the Conceptual Framework from the International Public Sector Accounting Standards Board. As a group, you are to read the report,...

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An extensive consultation paper has been provided to you related to the Conceptual Framework from the International Public Sector Accounting Standards Board.
As a group, you are to read the report, understanding its purpose and then discuss Phases 3 and 4 (Measurement as well as Presenting information in GPFR’s). NOTE: you are not required to discuss Phases 1 & 2.
This will require further research by your group to understand the background, a clear understanding of the relevance of each phase and a discussion as to where this will lead, what the likely outcomes are and why. You should consider and include the history and practices in Australia in your report, e.g. AASB and the structure that existed pre-IASB. As a conclusion, you are to include what you have learned/understood from the paper and from your findings.
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HA3011 Advanced Financial Accounting Assignment requirements. An extensive consultation paper has been provided to you related to the Conceptual Framework from the International Public Sector Accounting Standards Board. As a group, you are to read the report, understanding its purpose and then discuss Phases 3 and 4 (Measurement as well as Presenting information in GPFR’s). NOTE: you are not required to discuss Phases 1 & 2. This will require further research by your group to understand the background, a clear understanding of the relevance of each phase and a discussion as to where this will lead, what the likely outcomes are and why. You should consider and include the history and practices in Australia in your report, e.g. AASB and the structure that existed pre-IASB. As a conclusion, you are to include what you have learned/understood from the paper and from your findings.

Answered Same Day Dec 31, 2021

Solution

Robert answered on Dec 31 2021
101 Votes
Conceptual Framework for Financial Reporting
13
Conceptual Framework for
Financial Reporting
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Phase 3― Consideration of the measurement basis (or bases) that may validly be adopted
for the elements that are recognized in the financial statements.
Accounting is an art of recording, classifying, summarizing and reporting of accounting records
with aim of showing the financial health of an entity. Accounting can be defined as a body of
principles and conventions and an established general process for capturing financial information
elated to an entity’s resources and their use in achieving the entity’s goals. It is a field of
specialization critical to the functioning and operation of all types of enterprises.
Measurement of accounting records and transactions is the core objective of accounting.
Measurement of accounting transactions enables an organization to report efficient and effective
financial reports annually. Accounting deals with numbers and measurable quantities. It
accumulates measures and communicates numbers and measurable quantities of economic
information about an enterprise. Accumulation refers to recording and classifying data in
journals and ledgers. Measurement refers to the quantification of business transactions that have
occu
ed or that may occur. Communication refers to relevant and reliable information to users
of accounting information.
The elements reported in financial accounts according to International Public Sector Accounting
Standards Board (IPSASB) are the following:
- Reliability: Information related to accounts should be reliable. Reliability is the
characteristic of accounting information which gives the user confidence and trust that
the reported information is a reasonable representation of the actual events or items that
have occu
ed. To be reliable, the information related to accounts should be e
or-free
and neutral. An accountant’s bias must not color his information. Faithful representation,
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neutrality, prudence and completeness of financial records and transactions for a part of
eliable measurement of financial statements.
- Relevance: Information on accounts must be relevant to the user. Information is relevant
if it meets the needs of the user in decision-making. Thus, relevant information must have
some bearing on the decision being made. Relevant information relating to accounts are
used to form decisions and predictions about the past, present and future outcomes to the
end users of financial statements. To be relevant, it should be capable of monetary
computation.
- Understandability: Understandability is the quality of accounting information that enables
the users to perceive its significance, i.e., to understand the content and significance of
accounting statements and reports. It is important for the end users to understand and
interpret the financial statements in a better and efficient way. The accountant has a basic
esponsibility to describe business transactions clearly and concisely.
- Comparability: Usefulness is enhanced if accounting information can be compared with
similar information for the same organization at different times and for different
organizations at the same time. Comparability enhances the value of accounting
information by enabling the users to discern and detect similarities and dissimilarities
among different concerns as also in respect of the same concern over time. To achieve
comparability, consistency and disclosure of accounting policies are necessary.
Accounting bases are the various methods which have been developed for applying
fundamental accounting concepts to financial transactions and to items in financial
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statements. Accounting bases are used for constructing accounting figures which are
available. In particular, accounting bases are the methods developed for determining the:
1. Accounting periods in which revenues and costs should be recorded and recognized in
the Profit and Loss Account and,
2. Amounts at which material items should be shown in the Balance Sheet.
Accounting policies and principles are the specific accounting bases judged by business
enterprises to be most appropriate to the circumstances prevailing in the organization and
adopted by them for the purpose of preparing their financial accounts. Accounting concepts give
irth to accounting bases which is the foundation for the formation of accounting policies. The
following are the different examples where an enterprise can adopt different accounting
principles and policies in different areas of financial accounts:
- Methods of depreciation, depletion and amortization.
- Treatment of construction expenses.
- Conversion or translation of foreign monetary items.
- Valuation of inventories.
- Treatment of goodwill.
- Valuation of investments.
- Treatment of retirement benefits.
- Recognition of profit on long term contracts.
- Valuation of fixed assets.
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- Treatment of contingent liabilities, etc.
Financial...
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