Scope and components of framework

The framework and accounting standards serve different purposes within financial reporting: 1. Framework for Financial Reporting : - The Conceptual Framework provides the fundamental principles and concepts that underpin financial reporting. It serves as a guide for the development of accounting standards, helping in decision-making and interpretation. - It defines objectives, elements of financial statements, recognition, measurement, and disclosure principles but does not prescribe specific treatments for transactions. - The framework helps in preparing financial statements, ensuring consistency and logical thinking in the absence of specific standards. 2. Accounting Standards: - Accounting Standards provide detailed guidance on how specific transactions and events should be accounted for in financial statements. These are mandatory rules that entities must follow. - Standards like AS 1 (Disclosure of Accounting Policies) or AS 9 (Revenue Recognition) outline specific treatments, disclosures, and procedures, ensuring comparability and reliability in reporting. - While the framework provides principles, standards are authoritative and offer concrete instructions for various types of financial transactions. In essence, the framework establishes the philosophy and objectives behind financial reporting, while the standards provide practical guidance on the accounting treatment for specific areas.

siddesh N

CA Inter

★ 3K+

02-Oct-24 16:25

Framework is the structure or guidance based on which Accounting standards are framed. If on a particular topic, AS are not available, we refer to framework for accounting guidance.

CA Suraj Lakhotia

Admin

03-Oct-24 14:59