1a) According to IASB, the purpose of the conceptual framework consists in providing a consistent set
of principles that “underlie the preparation and presentation of financial statements” (Framework,
purpose and status, paragraph 1). For standard setters it is a practical guide that assist them in
developing future accounting standards and revising existing accounting standards, therefore assuring
homogeneity within the accounting standards. For preparers of financial statements it represents an
aid when it comes to apply accounting standards and when tackling issues that are not the subject of
any existing standard. Especially IAS 8 claim prepares to regard the definitions, recognition criteria and
measurement models in the framework. Auditors might use the framework in order to conclude
whether the financial statements of the entity comply with the accounting standards. Another purpose
is to support national accounting-setting organisations in developing domestic standards and thereby
reducing the gap to IFRS. Last but not least, it enhances users in the interpretation of information given
in the financial statements.
In addition, the conceptual framework presents the objective of general purpose financial statements,
namely, to provide financial information about the reporting entity, which are decision-useful for
existing or potential investors and other mentioned user groups, who are not able to require the
preparation of financial reports. The framework identifies seven main user groups, which are investors,
employees, lenders, suppliers, customers, government and the public, but states the investors and
lenders as the main user group the financial statements are directed to. These financial information
should be provided by disclosure of a Statement of Financial Position, a Statement of Comprehensive
Income, a Statement of Cash Flows, a Statement of Changes in Equity and notes.
The IASB proclaim explicitly, that the conceptual...