Question

1. GAAP and IFRS have their own “Conceptual Frameworks” for financial accounting.

   - What roles does IASB’s Conceptual Framework play? Is it different from the FASB?

          - What are the contents of IASB’s conceptual frameworks? Is it different from the FASB?

        Note: see the 2018(new) Conceptual Frameworks.

Answer 1

IASB & FASB:

Both IASB & FASB have the goal of establishing accounting standards and financial standards.

• FASB focuses on accounting standards in United standards, IASB focuses on Global standards'
• Several companies operate business globally, so IASB & FASB goes hand in Hand.
• They both have disclosure requirements which are different.
• Since it is difficult for companies to follow different standards now both IASB & FASB are making efforts for common fair value measurement and disclosure requirements.
• This kind of approach makes financial reporting more Transparant.
• FASB recieves fund through SEC, IASB recieves funds through private donors and corporations.

IASB conceptual Framework:

• Its Framework is to prepare and presentation of financial statements for external users.
• It helps in developing accounting policies for events not covered by existing standards.
• It helps auditors to form opinion whether financial statements confirm with IFRS
• It ensures whether all external users like lendors investors, employees interpret information in correct manner.
• It covers concepts of capital maintanence.