INANCIAL REPORTING & ANALYSISThe IASB Conceptual Framework for Financial Reporting

The IASB Conceptual Framework for Financial Reporting (the i??Conceptual Frameworki??) sets out the concepts that underlie the preparation and presentation of financial statements. According to Hines (1980), the ontological assumption underpinning the i??Conceptual Frameworki?? is that the relationship between financial accounting and economic reality is unidirectional, reflecting or faithfully reproducing relationship which presuppose that economic reality exists objectively, intersubjectively, concretely and independently of financial accounting practice (see p.315). In that sense, financial accounting reflects, mirrors, represents, or measures this pre-existent economic reality.

Requirement:

1. i??The conceptual framework is criticised for not fulfilling its functional objectives, principally that of providing a basis for guiding standard-setting and resolving accounting controversiesi??.

Critically discuss this statement taking into consideration the accounting principles, concepts and the focus of general purpose financial reporting outlined by the Conceptual framework.

NOTE:
Your essay must not exceed 2000 words, excluding footnotes and bibliography. It should have a good structure: an introduction which specifies the purpose of the essay together with an indication of the structure (signposted), some understanding of the concepts, some illustration of the issues with examples and finally end with a summary and discussion. 10 marks will be awarded on the structure and referencing.