According to Hong Kong Institute of Certified Public Accountants (hkicpa)
Autor: antoni • October 11, 2012 • Research Paper • 1,782 Words (8 Pages) • 1,525 Views
The conceptual framework is a system connected of objectives and fundamentals that prescribes the nature, function and limitations of financial reporting. The objectives identify the purposes of financial statement and the fundamentals concepts of financial accounting and reporting. Those concepts provide guidance in selecting the transactions, events, and circumstances to be accounted, how they should be recognized and measured, and how they should be summarized and reported.
According to Hong Kong Institute of Certified Public Accountants (HKICPA), this framework sets out the concepts on the preparation and presentation of financial statements for external users. The purpose of the framework is to assist different users of association.
Under those frameworks, HKICPA develops and reviews the Hong Kong Financial Reporting Standards (HKFRSs) and Accounting Guidelines. It assist prepares of financial statements and provide solution when there is conflict or non-existing in HKFRSs and Accounting Guidelines. When the auditors review the financial statement, it may assist them in forming an opinion on whether financial statements comply with HKFRSs. Other users can interpret the information on financial statement in compliance with HKFRS and Accounting Guidelines.
The Conceptual Framework is not an accounting standard and does not define any measurement or disclosure issue.
We needed a framework to provide direction and structure to financial statement. The Standards and Accounting Guideline need to establish by Board's member with a sound, comprehensive and internally consistent agreed.
If the Standards and Accounting Guidelines did not provided by frameworks, it becomes based on the concepts held by individual Board members. As Charles Horngren once noted, "As out professional careers unfold, each of us develops a technical conceptual framework. Some individual frameworks are sharply defined and firmly held; others are vague and weakly held; still others are vague and firmly held (Appendix 1)."
Therefore we need a conceptual framework for providing the direction and means to help in making our decision.
Part B
The conceptual framework provides guidance in recognition and measurement of the transactions, events, and circumstances on financials statement; and the element on financial statement should be classify to assets, liabilities, equity, income and expenses.
HKICPA mentioned that the financial statement provide the financial position and performance of an entity, and show the result of the entity's resources used by management to investors, lenders, employees, suppliers, customers, government and the public for theirs decision.
Shareholder is a person who provides money to entity
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