Conceptual Framework for Financial Reporting

Standard 2021 Issued
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The revised Conceptual Framework for Financial Reporting (Conceptual Framework) issued in March 2018 is effective immediately for the International Accounting Standards Board (Board) and the IFRS Interpretations Committee. For companies that use the Conceptual Framework to develop accounting policies when no IFRS Standard applies to a particular transaction, the revised Conceptual Framework is effective for annual reporting periods beginning on or after 1 January 2020, with earlier application permitted. 

The Conceptual Framework sets out the fundamental concepts for financial reporting that guide the Board in developing IFRS Standards. It helps to ensure that the Standards are conceptually consistent and that similar transactions are treated the same way, so as to provide useful information for investors, lenders and other creditors.

The Conceptual Framework also assists companies in developing accounting policies when no IFRS Standard applies to a particular transaction, and more broadly, helps stakeholders to understand and interpret the Standards.

The 2018 revised Conceptual Framework sets out:

  • the objective of general purpose financial reporting;
  • the qualitative characteristics of useful financial information;
  • a description of the reporting entity and its boundary;
  • definitions of an asset, a liability, equity, income and expenses and guidance supporting these definitions;
  • criteria for including assets and liabilities in financial statements (recognition) and guidance on when to remove them (derecognition);
  • measurement bases and guidance on when to use them;
  • concepts and guidance on presentation and disclosure; and
  • concepts relating to capital and capital maintenance.

Standard history

Conceptual Framework for Financial Reporting was issued by the International Accounting Standards Board in September 2010. It was revised in March 2018.

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