Conceptual Framework in the accounting approaches describes the concepts and objectives for the general purpose of financial accounting and reporting. It assists in revealing the scope and objectives of the financial reporting, qualitative characteristics of the sort of financial information and divulging the elements of financial reporting. The conceptual frameworks for the accounting approaches help in making a more consistent and logical standards, making the accounting standards accountable and an effective communication between the accounting standards setters with that of the constituents. In general, the conceptual framework identifies the financial information characteristics that necessarily benefits the user to make a decision and evaluate it for the allocation of the limited resources.
FRC undertakes the responsibility to regulate the activities of AASB, a crucial entity for maintain the Australian accounting standard with that of IASB. Further, it oversees the activities of Auditing and Assurance Standards Board (AUASB) and all the activities need to be presented in a report format to the Federal Government (Locke, 2011). As seen in case of ASIC, it formulates the corporate legislation and ensures in compliance with the Corporations Act 2001. The said Corporations Act works out the duties and responsibilities of the company executives specifying their natural conduct and for the purpose of the preparation of the financial statements -Income Statement, Cash Flow Statement, Balance Sheet and the Statement of Changes in Equity.
Sec. 297 of the Corporations Act gives a true and fair view of the financial position and the performance of the company. Sec. 227 of the ASIC Act tells for the AASB to develop a conceptual framework to make the accounting standards integrated in a single platform to have its global application. Since the year 2002, FRC has decided to adopt the accounting standards as complied with the IASB in the Australian context. IASB would issue the International Financial Reporting Standards (IFRS) which has an exposure draft facilitating public comment regarding its workings. These factors would apparently lead to the harmonising of the accounting standards . It would help to influence the social values conducive to the accounting subculture in different parts of the world, calling up for a ‘Standardisation’ of the accounting practices worldwide.
It is to be noted that the conceptual framework as adopted by the IASB, extended by the usage of IFRSs has been found relevance in over 100 countries in recent times. It benefits the potential investors in the international market to make for a reliable comparison, initiating the inflow of international capital and the subsequent reduction of the company’s cost in terms of financial reporting. This calls for a global harmonisation by adopting a single set of accounting standards throughout. Further, in an attempt to the Internationalisation aspect, certain accounting practices belonging to other countries were adopted in the local accounting standards of Australia. All these are to be done with the sole purpose of getting a ‘free-market’ along with a ‘pro-regulation’ perspective.
On a broader context, it could be held that the Board could resolve the issues complying with the conceptual framework as prescribed by the IASB. From the above discussion, it is found that the practices definitely carry-on with the faithfulness, as desired by a firm in revealing its financial stance. It would definitely help the members to reach a consensus for the project undertaken in alliance with the conceptual framework, so designed for the purpose. The wide acceptance of the IFRS would help the organisation to frame for a structured guideline issuing the accounting standards in an integrated approach. In short, the wide usage would be implemented without disturbing the qualitative aspects of the conceptual framework.