PURPOSES OF CONCEPTUAL FRAMEWORK

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A conceptual framework should reduce political pressures in making accounting judgments. The IASB is not the only beneficiary of the framework. The credibility of financial reporting is enhanced when purposes and concepts are used to provide direction and structure to financial accounting and reporting. The major purposes of the conceptual framework are furnished below:

(a) to assist the IASB in the development of future accounting standards and in its review of existing accounting standards, ensuring consistency across standards.

 (b) to assist the IASB in promoting harmonization of regulations, accounting standards, and procedures relating to the presentation of financial statements by providing a basis for reducing the number of alternative accounting treatments permitted by accounting standards.

(c) to assist national standard-setting bodies in developing national accounting standards.

(d) to assist preparers of financial statements in applying international financial reporting standards and in dealing with topics that have yet to form the subject of an accounting standard.

(e) to assist users of financial statements in interpreting the information contained in financial statements prepared in compliance with international financial reporting standards;

(f) to assist auditors in forming an opinion on whether financial statements comply with international accounting standards; and

(g) to provide those who are interested in the work of the IASB with information about its approach to the formulation of accounting standards.

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