International Financial Reporting Standards : A Practical Guide, Sixth Edition

Abstract

An acceptable coherent framework of
 fundamental accounting principles is essential for preparing
 financial statements. The major reasons for providing the
 framework are to: 1) identify the essential concepts
 underlying the preparation and presentation of financial
 statements; 2) guide standard setters in developing new
 accounting standards and reviewing existing standards; 3)
 assist preparers in preparing financial statements and
 dealing with topics that are not covered by a specific
 International Financial Reporting Standard (IFRS); 4) assist
 auditors in forming an opinion as to whether a set of
 financial statements conforms with IFRS; and 5) assist users
 in interpreting the financial information contained in a set
 of financial statements that comply with IFRS. The framework
 sets guidelines and should not be seen as a constitution;
 nothing in the framework overrides any specific standard.
 The objective of financial statements is to provide
 information about the financial position (statement of
 financial position), performance (statement of comprehensive
 income), and changes in financial position (statement of
 cash flows) of an entity that is useful to a wide range of
 users in making economic decisions. Users of financial
 information include present and potential capital providers,
 employees, lenders, suppliers, customers, and the
 government. Financial statements also show the results of
 management's stewardship of the resources entrusted to it.