The Conceptual Framework Project Is a Joint Project Between the Iasb and Fasb

The Conceptual Framework project is a joint project between the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) to develop an improved and common conceptual framework (Conceptual Framework for Financial Reporting 2010, 2010). Such a framework would provide a sound foundation for developing future accounting standards and is essential to fulfilling the Boards goal of developing standards that are principles-based, internally consistent, and internationally converged (Conceptual Framework for Financial Reporting 2010, 2010). This was due to the underlying criticisms that related to both the boards framework and their inconsistencies that both the frameworks posed. The purpose of this review is to discuss those issues (under certain headings) behind the revision of the current conceptual framework.

Users & Objectives of Financial Reporting

It was noted that IASB provides information that is useful to a wide range of users in making economic decisions whereas FASB provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions (Huckabay, 1999). The debate over which groups should be considered to be legitimate users of the financial information about an entity is one that has attracted great deal of debate whereby information rights were disregarded (Deegan, 2010). Another discussion involves that general purpose financial reporting is prepared to provide information that assist users to make and evaluate decisions (Deegan, 2010). The primary objective is providing information on an entity's economic or financial performance rather than on its social or environmental performance (Deegan, 2010). The current framework simply disagrees with the view where organisations should be accountable for both their economic and their social & environmental performance (Deegan, 2010).

Reporting Entity

Modern business arrangements have raised issues of what sort of entities should (or should not) issue financial statements, which other entities should be included in consolidated or combined financial statements and how to accomplish such inclusion (Conceptual Framework for Financial Reporting 2010, 2010). This gave rise to concept of reporting entity. The IASB