FrameworkforthepreparationandPresentationofFinancialStatements

1、? iascf29framework for the preparation and presentation offinancial statementsthe iasb framework was approved by the iasc board in april 1989 for publication in july 1989, andadopted by the iasb in april 2001.iasfw.fm page 29 thursday, january 26, 2006 11:50 amframework30? iascfcontentsparagraphspre

2、faceintroduction111purpose and status14scope58users and their information needs911the objective of financial statements1221financial position, performance and changes in financial position1521notes and supplementary schedules21underlying assumptions2223accrual basis22going concern23qualitative chara

3、cteristics of financial statements2446understandability25relevance2630materiality29 30reliability3138faithful representation33 34substance over form35neutrality36prudence37completeness38comparability3942constraints on relevant and reliable information4345timeliness43balance between benefit and cost4

4、4balance between qualitative characteristics45true and fair view/fair presentation46the elements of financial statements4781financial position4952assets5359liabilities6064equity6568performance6973income7477expenses7880capital maintenance adjustments81iasfw.fm page 30 thursday, january 26, 2006 11:50

5、 amframework? iascf31recognition of the elements of financial statements8298the probability of future economic benefit85reliability of measurement8688recognition of assets8990recognition of liabilities91recognition of income9293recognition of expenses9498measurement of the elements of financial stat

6、ements99101concepts of capital and capital maintenance102110concepts of capital102103concepts of capital maintenance and the determination of profit104110iasfw.fm page 31 thursday, january 26, 2006 11:50 amframework32? iascfprefacefinancial statements are prepared and presented for external users by

7、 many entitiesaround the world. although such financial statements may appear similar from countryto country, there are differences which have probably been caused by a variety of social,economic and legal circumstances and by different countries having in mind the needs ofdifferent users of financi

8、al statements when setting national requirements.these different circumstances have led to the use of a variety of definitions of the elementsof financial statements; that is, for example, assets, liabilities, equity, income andexpenses. they have also resulted in the use of different criteria for t

9、he recognition ofitems in the financial statements and in a preference for different bases of measurement.the scope of the financial statements and the disclosures made in them have also beenaffected.the international accounting standards committee (iasc) is committed to narrowingthese differences b

10、y seeking to harmonise regulations, accounting standards andprocedures relating to the preparation and presentation of financial statements.it believes that further harmonisation can best be pursued by focusing on financialstatements that are prepared for the purpose of providing information that is

11、 useful inmaking economic decisions.the board of iasc believes that financial statements prepared for this purpose meet thecommon needs of most users. this is because nearly all users are making economicdecisions, for example, to: (a)decide when to buy, hold or sell an equity investment;(b)assess th

12、e stewardship or accountability of management;(c)assess the ability of the entity to pay and provide other benefits to its employees;(d)assess the security for amounts lent to the entity;(e)determine taxation policies;(f)determine distributable profits and dividends;(g)prepare and use national incom

13、e statistics; or(h)regulate the activities of entities.the board recognises, however, that governments, in particular, may specify different oradditional requirements for their own purposes. these requirements should not, however,affect financial statements published for the benefit of other users u

14、nless they also meetthe needs of those other users.financial statements are most commonly prepared in accordance with an accountingmodel based on recoverable historical cost and the nominal financial capital maintenanceconcept. other models and concepts may be more appropriate in order to meet theob

15、jective of providing information that is useful for making economic decisions althoughthere is presently no consensus for change. this framework has been developed so that it isapplicable to a range of accounting models and concepts of capital and capitalmaintenance.iasfw.fm page 32 thursday, januar

16、y 26, 2006 11:50 amframework? iascf33introductionpurpose and status1this framework sets out the concepts that underlie the preparation andpresentation of financial statements for external users. the purpose of theframework is to: (a)assist the board of iasc in the development of future international

17、accounting standards and in its review of existing internationalaccounting standards;(b)assist the board of iasc in promoting harmonisation of regulations,accounting standards and procedures relating to the presentation offinancial statements by providing a basis for reducing the number ofalternativ

18、e accounting treatments permitted by international accountingstandards;(c)assist national standard-setting bodies in developing national standards;(d)assist preparers of financial statements in applying internationalaccounting standards and in dealing with topics that have yet to form thesubject of

19、an international accounting standard;(e)assist auditors in forming an opinion as to whether financial statementsconform with international accounting standards;(f)assist users of financial statements in interpreting the informationcontained in financial statements prepared in conformity withinternat

20、ional accounting standards; and(g)provide those who are interested in the work of iasc with informationabout its approach to the formulation of international accountingstandards.2this framework is not an international accounting standard and hence does notdefine standards for any particular measurem

21、ent or disclosure issue. nothing inthis framework overrides any specific international accounting standard.3the board of iasc recognises that in a limited number of cases there may be aconflict between the framework and an international accounting standard.in those cases where there is a conflict, t

22、he requirements of the internationalaccounting standard prevail over those of the framework. as, however, the boardof iasc will be guided by the framework in the development of future standardsand in its review of existing standards, the number of cases of conflict betweenthe framework and internati

23、onal accounting standards will diminish throughtime.4the framework will be revised from time to time on the basis of the boardsexperience of working with it.iasfw.fm page 33 thursday, january 26, 2006 11:50 amframework34? iascfscope5the framework deals with: (a)the objective of financial statements;

24、(b)the qualitative characteristics that determine the usefulness ofinformation in financial statements;(c)the definition, recognition and measurement of the elements from whichfinancial statements are constructed; and(d)concepts of capital and capital maintenance.6the framework is concerned with gen

25、eral purpose financial statements (hereafterreferred to as financial statements) including consolidated financial statements.such financial statements are prepared and presented at least annually and aredirected toward the common information needs of a wide range of users. someof these users may req

26、uire, and have the power to obtain, information in additionto that contained in the financial statements. many users, however, have to relyon the financial statements as their major source of financial information andsuch financial statements should, therefore, be prepared and presented withtheir ne

27、eds in view. special purpose financial reports, for example, prospectusesand computations prepared for taxation purposes, are outside the scope of thisframework. nevertheless, the framework may be applied in the preparation of suchspecial purpose reports where their requirements permit.7financial st

28、atements form part of the process of financial reporting. a completeset of financial statements normally includes a balance sheet, an incomestatement, a statement of changes in financial position (which may be presentedin a variety of ways, for example, as a statement of cash flows or a statement of

29、funds flow), and those notes and other statements and explanatory material thatare an integral part of the financial statements. they may also includesupplementary schedules and information based on or derived from, andexpected to be read with, such statements. such schedules and supplementaryinform

30、ation may deal, for example, with financial information about industrialand geographical segments and disclosures about the effects of changing prices.financial statements do not, however, include such items as reports by directors,statements by the chairman, discussion and analysis by management an

31、d similaritems that may be included in a financial or annual report.8the framework applies to the financial statements of all commercial, industrialand business reporting entities, whether in the public or the private sectors.a reporting entity is an entity for which there are users who rely on the

32、financialstatements as their major source of financial information about the entity.users and their information needs9the users of financial statements include present and potential investors,employees, lenders, suppliers and other trade creditors, customers, governmentsand their agencies and the pu

33、blic. they use financial statements in order toiasfw.fm page 34 thursday, january 26, 2006 11:50 amframework? iascf35satisfy some of their different needs for information. these needs include thefollowing: (a)investors. the providers of risk capital and their advisers are concerned withthe risk inhe

34、rent in, and return provided by, their investments. they needinformation to help them determine whether they should buy, hold or sell.shareholders are also interested in information which enables them toassess the ability of the entity to pay dividends.(b)employees . employees and their representati

35、ve groups are interested ininformation about the stability and profitability of their employers.they are also interested in information which enables them to assess theability of the entity to provide remuneration, retirement benefits andemployment opportunities.(c)lenders . lenders are interested i

36、n information that enables them todetermine whether their loans, and the interest attaching to them, will bepaid when due.(d)suppliers and other trade creditors . suppliers and other creditors are interestedin information that enables them to determine whether amounts owing tothem will be paid when

37、due. trade creditors are likely to be interested inan entity over a shorter period than lenders unless they are dependentupon the continuation of the entity as a major customer.(e)customers . customers have an interest in information about thecontinuance of an entity, especially when they have a lon

38、g-terminvolvement with, or are dependent on, the entity.(f)governments and their agencies . governments and their agencies areinterested in the allocation of resources and, therefore, the activities ofentities. they also require information in order to regulate the activities ofentities, determine t

39、axation policies and as the basis for national incomeand similar statistics.(g)public. entities affect members of the public in a variety of ways.for example, entities may make a substantial contribution to the localeconomy in many ways including the number of people they employ andtheir patronage o

40、f local suppliers. financial statements may assist thepublic by providing information about the trends and recent developmentsin the prosperity of the entity and the range of its activities.10while all of the information needs of these users cannot be met by financialstatements, there are needs whic

41、h are common to all users. as investors areproviders of risk capital to the entity, the provision of financial statements thatmeet their needs will also meet most of the needs of other users that financialstatements can satisfy.11the management of an entity has the primary responsibility for the pre

42、parationand presentation of the financial statements of the entity. management is alsointerested in the information contained in the financial statements even thoughit has access to additional management and financial information that helps itcarry out its planning, decision-making and control respo

43、nsibilities.management has the ability to determine the form and content of such additionaliasfw.fm page 35 thursday, january 26, 2006 11:50 amframework36? iascfinformation in order to meet its own needs. the reporting of such information,however, is beyond the scope of this framework. nevertheless,

44、 published financialstatements are based on the information used by management about thefinancial position, performance and changes in financial position of the entity.the objective of financial statements12the objective of financial statements is to provide information about thefinancial position,

45、performance and changes in financial position of an entitythat is useful to a wide range of users in making economic decisions.13financial statements prepared for this purpose meet the common needs of mostusers. however, financial statements do not provide all the information thatusers may need to m

46、ake economic decisions since they largely portray thefinancial effects of past events and do not necessarily provide non-financialinformation.14financial statements also show the results of the stewardship of management, orthe accountability of management for the resources entrusted to it. those use

47、rswho wish to assess the stewardship or accountability of management do so inorder that they may make economic decisions; these decisions may include, forexample, whether to hold or sell their investment in the entity or whether toreappoint or replace the management.financial position, performance a

48、nd changes in financial position15the economic decisions that are taken by users of financial statements require anevaluation of the ability of an entity to generate cash and cash equivalents and ofthe timing and certainty of their generation. this ability ultimately determines,for example, the capa

49、city of an entity to pay its employees and suppliers, meetinterest payments, repay loans and make distributions to its owners. users arebetter able to evaluate this ability to generate cash and cash equivalents if theyare provided with information that focuses on the financial position,performance a

50、nd changes in financial position of an entity.16the financial position of an entity is affected by the economic resources itcontrols, its financial structure, its liquidity and solvency, and its capacity toadapt to changes in the environment in which it operates. information about theeconomic resour

51、ces controlled by the entity and its capacity in the past to modifythese resources is useful in predicting the ability of the entity to generate cashand cash equivalents in the future. information about financial structure isuseful in predicting future borrowing needs and how future profits and cash

52、flows will be distributed among those with an interest in the entity; it is alsouseful in predicting how successful the entity is likely to be in raising furtherfinance. information about liquidity and solvency is useful in predicting theability of the entity to meet its financial commitments as the

53、y fall due. liquidityrefers to the availability of cash in the near future after taking account offinancial commitments over this period. solvency refers to the availability of cashover the longer term to meet financial commitments as they fall due.iasfw.fm page 36 thursday, january 26, 2006 11:50 a

54、mframework? iascf3717information about the performance of an entity, in particular its profitability, isrequired in order to assess potential changes in the economic resources that it islikely to control in the future. information about variability of performance isimportant in this respect. informa

55、tion about performance is useful in predictingthe capacity of the entity to generate cash flows from its existing resource base.it is also useful in forming judgements about the effectiveness with which theentity might employ additional resources.18information concerning changes in the financial pos

56、ition of an entity is useful inorder to assess its investing, financing and operating activities during thereporting period. this information is useful in providing the user with a basis toassess the ability of the entity to generate cash and cash equivalents and the needsof the entity to utilise th

57、ose cash flows. in constructing a statement of changes infinancial position, funds can be defined in various ways, such as all financialresources, working capital, liquid assets or cash. no attempt is made in thisframework to specify a definition of funds.19information about financial position is pr

58、imarily provided in a balancesheet.information about performance is primarily provided in an incomestatement. information about changes in financial position is provided in thefinancial statements by means of a separate statement.20the component parts of the financial statements interrelate because

59、they reflectdifferent aspects of the same transactions or other events. although eachstatement provides information that is different from the others, none is likely toserve only a single purpose or provide all the information necessary for particularneeds of users. for example, an income statement

60、provides an incomplete pictureof performance unless it is used in conjunction with the balance sheet and thestatement of changes in financial position.notes and supplementary schedules21the financial statements also contain notes and supplementary schedules andother information. for example, they ma