The Framework's purpose is to:

1. assist the IASB in developing and revising IFRSs that are based on consistent concepts,
2. to help preparers to develop consistent accounting policies for areas that are not covered by a
standard or where there is choice of accounting policy, and
3. to assist all parties to understand and interpret IFRS.
*The Framework is not a Standard and does not override any specific IFRS.
* In case of conflict, standard always prevail over the Conceptual Framework
* Conceptual Framework is the foundation of IFRS standard.
Primary users of general purpose financial reporting are present and potential:

 investors
 lenders and
 other creditors

- use that information to make decisions

*general purpose financial reports cannot provide all the information that users may need to make
economic decisions.

Qualitative characteristics of useful financial information

The qualitative characteristics of useful financial reporting identify the types of information are likely to
be most useful to users in making decisions about the reporting entity on the basis of information in its
financial report.
Fundamental qualitative characteristics
1. Relevance
- capable of making a difference in the decisions made by users.
- Financial information is capable of making a difference in decisions if it has predictive value,
confirmatory value, or both.

Materiality - entity-specific

2. Faithful representation
- represent faithfully the phenomena it purports to represent.
- seeks to maximise the underlying characteristics of completeness, neutrality (prudence) and
freedom from error.

Prudence - is the exercise of caution when making judgements under conditions of uncertainty.
Enhancing qualitative characteristics
1. Comparability
- useful if it can be compared with a similar information about other entities and with similar
information about the same entity for another period or another date.
 2. Verifiability
- assure users that information represents faithfully the economic phenomena it purports to
represent.
- means that different knowledgeable and independent observers could reach consensus

3. Timeliness
- available to decision-makers in time

4. Understandability
- Classifying, characterising and presenting information clearly and concisely makes it
understandable.

Financial reports are prepared for users who have a reasonable knowledge of business and
economic activities and who review and analyse the information with diligence.

cost constraint
- costs should be justified by the benefits
Financial statements are normally prepared on the assumption that the reporting entity is a going concern
reporting entity is not necessarily a legal entity
consolidated financial statements are more likely to provide useful information to users of financial
statements than unconsolidated financial statements.
Measurement of the elements of financial statements
1. Historical cost
- most commonly used

2. Current cost
3. Net realisable (settlement) value
4. Present value (discounted)

The Conceptual Framework 2010

Conceptual Framework for Financial Reporting 2018 (IFRS Framework)
Objective of IAS 1
1. to prescribe the basis for presentation of general purpose financial statements
2. to ensure comparability both with the entity's financial statements of previous periods and with
the financial statements of other entities.

- sets out the overall requirements for the presentation of financial statements, guidelines for their
structure and minimum requirements for their content.

Scope
- applies to all general purpose financial statements
General purpose financial statements are those intended to serve users who are not in a position to
require financial reports tailored to their particular information needs.
Objective of financial statements
- to provide information about the financial position, financial performance, and cash flows of an
entity that is useful to a wide range of users in making economic decisions. To meet that
objective, financial statements provide information about an entity's: [IAS 1.9]

- assets liabilities equity income and expenses, including gains and losses contributions by and
distributions to owners (in their capacity as owners) cash flows.