THE CONCEPTUAL FRAMEWORK

 Presented By : JEROME JERME D. MARIN

PSBA-MBA
 The Conceptual Framework for Financial Reporting
1. The Conceptual Framework deals with a comprehensive set of concepts used in financial reporting,
particularly in the preparation and presentation of general-purpose Financial Statements (FS).
2. The Conceptual Framework is not a standard and does not override any specific PFRS.
3. The purposes of the Conceptual Framework are:
A) Assist FRSC in developing PFRS and its review and adoption of existing
International Financial Reporting Standards (IFRS).
B) Assist preparers of FS in applying PFRS and in dealing with topics that
have yet to form the subject of a PFRS.
C) Assist users in interpreting information contained in the FS
D) Assist users in interpreting information above formulation of PFRS by FRSC
E) Provide interested parties with information about formulation of PFRS by FRSC
 The Conceptual Framework for Financial Reporting

4. In case rare conflict, the requirements of PFRS prevail over the Conceptual
Framework.
5. The Objective of financial reporting forms the foundation of the Conceptual
Framework. General purpose financial reports must provide financial
information about the reporting entity that is useful to existing and potential
investors, lenders and other creditors in making decisions about:
1. Buying, selling or holding equity or debt instruments.
2. Providing or setting loans or other forms of credit.
3. Exercising rights to vote on, or otherwise influence,
management’s action that affects the use of the entity’s resources.
 The Conceptual Framework for Financial Reporting

6. The users of financial reports are broadly classified into:

 Primary Users: present and potential investors lenders and other creditors
 Other Users: employees, customers, governments, market regulators and the public.
7. Information about ECONOMIC RESOURCES and CLAIMS assist users to assess an
entity’s financial position, particularly about its .
1.) Financial Strengths and weaknesses
2.) Liquidity and Solvency
3.) Need and Ability to obtain financing.
8. Change in Economic Resources and Claims result from entity’s financial performance and
other transactions such as issuing debt or equity instruments. Financial Performance is
reflected by:
The Conceptual Framework for Financial Reporting

8. Change in Economic Resources and Claims result from entity’s financial

performance and other transactions such as issuing debt or equity instruments.
Financial Performance is reflected by:
1.) Accrual Accounting and 2.) Past Cash Flow
 Users of Financial Information may be Classified into two, namely:
a. Primary Users
b. Other Users