Introduction
Purpose and Status
1
This Framework sets out the concepts that underlie the preparation and presentation of financial statements for external users. The purpose of the Framework is to:
(a) assist the AASB in the development of future Australian Accounting Standards and in its review of existing Australian Accounting Standards, including evaluating proposed International Accounting Standards Board pronouncements;
(b) assist the AASB in promoting harmonisation 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 Australian Accounting Standards;
(c) [deleted by the AASB];
(d) assist preparers of financial statements in applying Australian Accounting Standards and in dealing with topics that have yet to form the subject of an Australian Accounting Standard;
(e) assist auditors in forming an opinion as to whether financial statements conform with Australian Accounting Standards;
(f) assist users of financial statements in interpreting the information contained in financial statements prepared in conformity with Australian Accounting Standards; and
(g) provide those who are interested in the work of the AASB with information about its approach to the formulation of Australian Accounting Standards.
2
This Framework is not an Australian Accounting Standard and hence does not define standards for any particular measurement or disclosure issue. Nothing in this Framework overrides any specific Australian Accounting Standard.
3
The AASB recognises that in a limited number of cases there may be a conflict between the Framework and an Australian Accounting Standard. In those cases where there is a conflict, the requirements of the Australian Accounting Standard prevail over those of the Framework. As, however, the AASB will be guided by the Framework in the development of future Standards and in its review of existing Standards, the number of cases of conflict between the Framework and Australian Accounting Standards will diminish through time.
4
The Framework will be revised from time to time on the basis of the Board’s experience of working with it.
Scope
5
The Framework deals with:
(a) the objective of financial statements;
(b) the qualitative characteristics that determine the usefulness of information in financial statements;
(c) the definition, recognition and measurement of the elements from which financial statements are constructed; and
(d) concepts of capital and capital maintenance.
6-8
[Deleted – replaced by concepts in the Appendix, Chapter 1]