An Introduction to IASBS FRAMEWORK

Category: Accounting

The IASB' S framework was followed by the boards of the IASC and controlled from 1973 till 2001 . IASB established on April 1. 2001. The purpose is to encourage the organisations worldwide. (B. Dawn, 2005)

The goal of the IASB'S framework is , as most of the organisation face so many conflicts in accounting standard. Therefore to overcome those errors there are some useful concept and guide lines to present and resolve the financial statement .

IASB framework provides

Technical consequence which including the process and content of the international accounting standard .

Create a sketch in what they are going to do and another a report for the public attention and comments . If it is relevant for public there will be public hearing and discussion. Finally disagree or agree , amend the adjustment and proceed .

An agenda for an external uses.

This does not refer to financial reports

The international Accounting Standard board is sets out for basic theory of financial statement:

Accrual basic (matching concern): is to maintained income and expenses. It simply lists the income and expenses as appears. most of the businesses use this method as it is easy to manage the financial side .the accountants duty is to include the outgoing or income those sums (due or payable )

eg : telephone bill paid is £300, telephone bill for the whole amount is £350, therefore in income statement shows as £50 owing . by showing this it show true value output .

going concern :

this suggests the demands to relate the worth of assets the near future gain and they make it possible as they can. The committee of directors should make sure, that all assessment (company management and its auditors) accurately done, according to organisations quality . Eg: re-sale value,

Qualitative characteristics that make information in financial statement useful .

These features are the concept that make the financial statement useful to the users . The people like creditors, public and investors.

The principles are :

understand ability :

The data should not be confusing to the user. we should consider that they are medium knowledge of business , economic capacity and also some are willing to know the information for special purpose.


This expresses help the user to compare the companies around the field and make equivalence of accomplishment over the period .

Also should be able to compare different organisations

Informing of accounting policies and if there is any changes that will help the users in making comparisons.(M.W.E Gautier & B Underdown, 2000)


The date that provided in the financial statement is useful for the uses when making economic judgment. It is more likely prediction value the information may not necessarily should be clearly expressed, it is the user who use the information to their own statement about the output of the past , present and future events in an organisation.

Eg: the managing director's key worker is the personnel. dislike the information may not be connected between the staff and company .the nature parties should bring out as strictly relevant information by nature .


Providing information should be released from equipment errors , miss-statement , and mistakes . it should be faithfully submitted therefore we can rely on the users faithful deals and point out events .

Eg : if there was a legality action to damage and it has been controversial . it may not effect the business and the full amount will not show in the balance sheet . This is unreliable. To verify the relevance if should show as notes.

There are few sub characteristics

How are they meeting needs of the public

this prepares high attribute ,to compare and understand accounting standard eligible for their needs.

The standard that simplify the financial reporting ideas on SMES will be able to use globally.

How are the uses of the information

The financial information provides financial assumption , achievement, and changes in financial assumption of the organisation . this will be profitable to wide chain of users to make economic decisions.

Useful points :

It dominants costs and expends.

Predicting trends

Preparation for the future

Observing accomplishment

Decision making

Who are the users of the financial information

In a financial statement includes balance sheet , the statement of changes of financial assumption , income statement and statement of maintained earnings .

There are several users of this information : investors and their advisors , customers , trade creditors ,, labours , suppliers , employees , government and their agents and public . financial statement does not provide all information asked by the users .it's only represent financial impression of past out come and future predictions .

What are their needs from the information provided

Investors :

Are interested in investment risks and issues in the organisation .this will help them to make decisions to buy , hold or sell the assets .


Would like to know employer's stableness . how profitable and whether they can provide pension scheme and regular payments.

Government bodies

The information empower to adjust the firms event . the registered companies will update their recent accounts to the company house (means any company should register, before opening they will authorise if it is LTD or PLC) .provided information will influence the public of what the organisation has accomplished for the end of the year . and the safety of the residents .if they have are operating within the rules set by the regulatory agents .

Eg : if the information are not given to the company house they can take legal action as criminal offence .


They would be specify want to know whether their owing would be paid off on time (given time period). The creditors will not willingly to do business if there are not reliable on their payments .

The public

It will affect in different way : the local resident would like to know the success of the organisation . will it encourage the local economic production of the job opportunities, tax , and the funds of charitable contribution . members of the public are interested if the companies would be able to continue their contribution .

Limitation of the financial information

Measure goodwill is personal

Information is historical

Only can compare with similar organisations

Include capable of being quantified data

Data fingers are different, company to company


The importance of the assignment is to identify the IASB's framework and there characteristics. How it is important to the users . How it works and present accordingly in findings stated: "Millstein (2000) argued that accounting and audits are the lynchpin to improve capital flows ,if you provide wrong information you can miss guide capital flow. If you lead, others will follow.'"

Meaning: the quality characteristic should apply accordingly, because it is very important . if information are not reliable to the users it will miss lead and that will affect the profit of the organisation . By using the audits it will help to find the mistakes and make them correct.

In part (B) it mentions that "financial position are not public prospectuses inviting individual to invest" I disagree this state according to the findings "stock exchange " janet , E. Morrison , attorney-at-law (January 2010) "public investment significant advantages is its ability to raise capital from the public, such capital may be used to financial operational and structural growth without taking any loans or debts; market is usually made by "initial public offering or IOP" this framework is applied by world wild therefore it is relevant to keep in mind.


B. Dawn, (2005) available from :

M.W.E Gautier & B Underdown, accounting theory and practice , 4th ed,(1991)

Millstein (2000) conference of IFAC, World Bank advisor Ira Millstein:

Janet E. Morrison, Attorney-at-Law January 2010