Conceptual Framework for Financial Reporting 2018 (IFRS Framework) - still applies in 2024

Summary

In this video, Sylvia from IFRSbox.com provides a concise overview of the 2018 IFRS Conceptual Framework, which serves as a foundation for financial reporting standards. The framework consists of eight chapters, detailing the objectives of financial reporting, qualitative characteristics of financial information, financial statements and reporting entities, elements of financial statements, recognition and de-recognition, measurement, presentation and disclosure, and concepts of capital and capital maintenance. Sylvia emphasizes the importance of relevance, faithful representation, and enhancing characteristics like comparability and understandability in financial reporting.

Takeaways

• 📚 The video provides a summary of the 2018 IFRS Conceptual Framework, which is a guide for the preparation and presentation of financial statements.
• 🔍 Sylvia from IFRS Box introduces the IFRS Kit, a learning platform designed to help understand and apply IFRS standards.
• 📈 The 2018 framework consists of eight chapters, each addressing different aspects of financial reporting.
• 🎯 Chapter 1 outlines the objective of general-purpose financial reporting, which is to provide useful information to investors, lenders, and other creditors.
• 💼 Chapter 2 discusses the qualitative characteristics of financial information, emphasizing relevance and faithful representation.
• 📊 Chapter 3 focuses on financial statements and the reporting entity, detailing what should be reported and the types of financial statements.
• 🏢 Chapter 4 defines the elements of financial statements, including assets, liabilities, equity, income, and expenses.
• 🔑 Chapter 5 explains the criteria for recognition and de-recognition of elements in financial statements.
• 📏 Chapter 6 delves into measurement, discussing the selection of measurement bases such as historical cost and current value.
• 📑 Chapter 7 addresses presentation and disclosure, highlighting the importance of effective communication of financial information.
• 💡 Chapter 8 revisits the concepts of capital and capital maintenance, which have been carried over from the previous version of the framework.

Q & A

What is the purpose of the conceptual framework for financial reporting as discussed in the video?

The purpose of the conceptual framework for financial reporting is to provide a basis for the development of International Financial Reporting Standards (IFRS) and to guide the interpretation of standards. It helps in achieving consistency and comparability in financial reporting.

When was the final version of the conceptual framework for financial reporting issued?

The final version of the conceptual framework for financial reporting was issued in March 2018.

How many chapters does the new framework consist of?

The new framework consists of eight chapters.

What is the objective of general purpose financial reporting as per the framework?

The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors for making economic decisions.

What are the two fundamental qualitative characteristics of financial information as discussed in the video?

The two fundamental qualitative characteristics of financial information are relevance and faithful representation.

What is the role of the statement of financial position in financial reporting?

The statement of financial position plays a role in financial reporting by recognizing assets, liabilities, and equity, which provides information about the entity's financial position at a specific point in time.

What is the concept of 'going concern' in the context of financial reporting?

The 'going concern' concept in financial reporting assumes that an entity will continue its operations in the foreseeable future and will not liquidate or materially curtail its operations.

What are the different types of financial statements mentioned in the video?

The different types of financial statements mentioned are consolidated, unconsolidated, and combined financial statements.

What does the term 'recognition' mean in the context of financial statements?

In the context of financial statements, 'recognition' means the inclusion of an element into the financial statements when it meets the definition and links the elements in the statement of financial position and the statement of financial performance.

What are the two basic measurement bases discussed in the framework?

The two basic measurement bases discussed in the framework are historical cost and current value.

What is the purpose of presentation and disclosure in financial reporting?

The purpose of presentation and disclosure in financial reporting is to communicate financial information effectively by focusing on objectives and principles, classifying information, and avoiding unnecessary details or over-aggregation.

What are the two concepts of capital maintenance explained in the framework?

The two concepts of capital maintenance explained in the framework are financial capital maintenance, which is synonymous with the net assets of equity of the entity, and physical capital maintenance, which is based on the productive capacity of the entity.