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Financial reporting
is extremely broad and must accustom to various users. Financial standards have
been implemented by the International accounting standards board (IASB) and
FASB to achieve global harmonization (or convergence), thereby creating an open
and accountable world (Lehman, 2005; Roberts, 1991). Nobes (2001) demonstrates the useful traits of Accounting
standards, by providing Reference reference focus more on the
limitations that are imbedded within accounting standards, they do not equally
benefit different size entities. I will furthermore be looking into Accounting
guidelines, such as the conceptual framework. And assessing reference and
references critiques to determine whether the Conceptual framework truly
lacks fundamental information, making reporting of finical information more
difficult to assess future cash flows, Along with evaluating the Conceptual
frameworks modifications as clearly reference believe “Shouldn’t monkey
with old written standards…” Whilst taking into consideration the technological
and economic phenomon we currently live in, are the current Finical reporting
methods useful. As of recent times, Relevance and Faithful representation were
deemd to be the upmost crucial roles in Financial reporting. The IASB defines
relevance as ‘The capacity of information to make a difference in a decision by
helping users to form predictions about the outcomes of past, present, and
future events or to confirm or correct prior expectations”(Financial
accounting standards board, 1980, glossary), the incredibly vague definitions
has sparked much controversy over  “what
is supposed to be relevant”(R.A. Bryer p.581 1999).”Faithful representation faithful
representation represents the substance of an economic phenomenon (BC2.18–BC2.20)



The conceptual framework for Financial reporting standards has had
numerous revised issues.

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Conceptual Framework for Financial Reporting, which was first issued in
1989 and remained unchanged until 2010, (pdf) consists of many beneficial
attributes which provide guidelines for financial reporting. The most recently
revised conceptual framework declares relevance as a fundamental characteristic
in reporting financial information.  Elliott
(2015) states that relevant financial information consists of either predictive
and confirmatory vales, or both. Predictive values “can be used as an input to
processes employed by users to predict future outcomes” (P. 190). Predictive
values must allow users to make assumptions on future financial results.
Whereas confirmatory values assess previous evaluations. Both confirmatory and
predictive values interrelate. Elliott (2015) further goes on to demonstrate
that revenue
information for the present year, may be used as the basis for predicting revenues
in future years, which can be compared with revenue predictions for the current
year that were made in past years.

many countries adopting the new IFRS conceptual framework, it is easier to
compare financial reports among countries and may even improve international
relations. Having similar reporting guidelines will make it easier to compare
cashflows between entities, and overall increase competition. Economist Machlup,
(1967) argues that “competition reduces managerial slack” furthermore
supporting the thoery that relevance is improving future cash flows for
entities, as improved stewardship is said to increase entities profitability. Taipaleenma?ki
& Ika?heimo, (2013); Ahmed & Duellman, 2013 strongly believe that management
accounting is curial in supporting financial accounting. With the improvement of future net cash flow predictions of, countries
and large entities are branching closer together through globalisation,
predictions about future financial statuses are easier to predict.

Bull, (2016 pp.9) also
goes on the list the conceptual frameworks global success “Many countries are
replacing their national standards” the more people who adopt the conceptual
will furthermore encourage other
to also pick it up. Wiley (2012), supports with Bull’s Perception, the reduction
of international differences in accounting standards helps   accounting standards assist to some degree in removing
barriers to cross-border acquisitions diverstitures, which in theory will
reward investor with increased takeover premiums. Whittington (2008), also acknowledges
the global integration as a success, however he picks up on the fact that
companies are able to restrict certain
options within the standards, Australia has already done so. He
further goes on to threat “(pp. 53) If this practise becomes more widespread,
international comparability of the standard will be lost” (pp.495-520). Lennard
(2007) also picks up on this too, “provide axioms from which specific
accounting requirements can be deduced with ineluctable logic.” Consequently,
companies will assume they are under the same guidelines and may compare Cash
flows using different
information and may lead to over statement or understatement of company status.
Fundamental analysis origins may be dated from Graham and Dodd’s (1934) work, in
which the authors claimed the importance of fundamental factors in shares’
price evaluation. In theory, the value of a company, and as a result, the price
of shares, is given by the sum of the present value of future cash flows
discounted by the risk adjusted discount rate, emphasising the important of an accurately
reported cash flow. Along with implying the conceptual framework may actually
cause more confusion rather than assisting the assessment of the prospects for
future net cash flow to the entites. There is much sparked debate that Stewardship
should be emphasised as a fundamental role of financial reporting.



The conceptual
framework has changed reporting standards in a way that The Board affirms that
fair value measurement for financial assets and financial liabilities
contributes more relevant and coherent information over historical cost. Penman
(2007), considers fair value to be more relevant because it reflects the
current cash equivalent value of financial assets and financial liabilities.
Therefore, companies now have the option to record fair value in their accounts
for most financial assets and financial liabilities, including such items as receivables,
investments, and debt securities. ——– M.E. Barth (1995) asserts that Earnings
numbers based on fair values for investment securities are likely to be more
volatile, or variable, than those based on historical cost. Because this
increased volatility is not reflective of the underlying economic volatility of





 Stolowy and
Cazavan (2001) argue that the complete set of
intangible resources carry relevant information about the financial position of
the reporting entity, so it should be included in the financial statements. An
intangible asset is defined as “An identifiable non-monetary assets without
physical substance” (IASplus(b),n.d.) Highlighting weakness within the conceptual framework.(pdf)
Failing to recognize internally generated
intangible assets causes difficulties in the measurement of the entities’
performance and impedes the accurate assessment of returns related to these
resources. Hendriksen and van Breda 
1992, p. 634) arguing that “intangibles are no less assets just because
they lack substance. Their recognition should follow, therefore, the same rules
as all assets”. Grojer (2001) looks into the challenges that regard reporting
intangible assets to try and understand the conceptual frameworks reasons
behind this, he comes up with a theory that the greatest challenge regarding
reporting intangible goods, is finding the balance between relevance and
faithful representation, because there are times where information on
intangibles is deemed highly subjective. The current regulations are quite
conservative and emphasises more towards faithful representation.



Faithful representation means information must be complete, neutral, and
free of material error. Elliott. B (2017) notes that cash flows can be very much dependent upon by
users to represent faithfully what they purport. Cash flow accounting avoids
the tension that can arise between prudence and neutrality because, whilst
neutrality involves freedom from deliberate or systematic bias, prudence is a
potentially biased concept that seeks to ensure that, under conditions of
uncertainty, gains and assets are not overstated and losses and liabilities are
not understated. Wiley (1999) claims that cash flows are more informative than
earnings because they are less subjective to managerial manipulation than
accrual earnings.

Where supporters usually argue many people criticise Conceptual
frameworks updates. “Monkeying
with financial statements… is a terrible idea. Investors have 500 years of practice
interpreting financial statements while learning to understand…and value our
more than $60 trillion in total assets. In doing so, they have developed
methods to adjust for many of the anomalies…that emerge from our archaic
double-entry bookkeeping practices from time to time… Balance sheets are for
stuff…not people or ideas” (Rutledge 1997).


The principles in the conceptual framework are specific in nature while
accounting standards provide more general requirements for financial reporting
(2012, John wiley & sons)



Accounting standards differ from a regulatory framework, as the framework
can be manipulated and isn’t conpultory, where as accounting standards are compulsory.
Nobe’s indicates many benefits of accounting standards. Just as frameworks,
they improve accuracy and guidance. They also reduce imprecision that leads to
aggressive reporting choices by management. However, Michaela (2012) suggests
that these advantages are “unable to overcome the perceived disadvantages”
(pp.90.) The attempt to cover all contingencies is a problem as there are many
different organisation, it is also not practical to make reporting standards extremely
details as this leaves them incomplete and obsolete. Furthermore, leaving out
one of the fundamental qualities within faithful representation, as mentioned
before by ***** Consequently limiting usefulness in assessing an entities cash


P. Chand & m. White (2007, p.605-622) state “it would be naive to
assume, as IASB does, that a single regulatory framework can be established
that meets the financial reporting needs of all societies.” There are a range
of disparate user groups for financial reporting. Several studies have
demonstrated that the work of the IASC/B is not related to the needs for
accountability to an individual society, but to the needs for accountability by
multinational enterprises to the world’s major capital markets (Chandler, 1992;
Ngangan et al., 2005; Saudagaran, 2004). The IASB cannot take cognizance of the
individual national, cultural and political factors of all its member nations
while preparing IFRSs. Transporting IASB standards to developing countries –
which have their own disparate group of external information users that operate
within internationally diverse cultural, social, and political environments –
should not be expected to have optimum results (Hopwood, 2000; Ngangan et al.,
2005). Whittington goes on to stress the concern of the IASB being dominated by
‘Anglo-saxon accounting’.

Commission and
latter the Parliament have emphasised their desire to gain greater control over
the standard setting process. There is a fear that the IASB is dominated by
‘Anglo-Saxon accounting’G. Whittington / J. Account. Public Policy 27 (2008)



It is important to take into consideration whether relevance or
‘decision-usefulness’ deserves to be the upmost important factor in financial
reporting, or whether stewardship should be accounted for as a decisive factor.
Stewardship is concerned with the accountability of the directors, or management
board, of a business entity to its proprietors or owners. Ahmed
& Duellman, (2013) This is at the
heart of the financial reporting process in many jurisdictions. Lennard (2007)
Argues that stewardship “highlights the importance of historical information
and that information should be complete.” Completeness is a characteristic of
faithful representation as noted above by Lennard (2007).  management accounting systems provide the cost
data and inventory valuations that are used to support financial reporting and,
in this sense, are subordinate to financial reporting (Richardson, 2002).




this paper, I have taken a demand approach in considering how the conceptual framework,
and accounting standards both are facilitating the reporting of financial information,
more importantly the usefulness of assessing an entities future cash flows.
Looking deeply into relevance and faithful representation, I found that 

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