CONCEPTUAL FRAMEWORK

WHAT IS YOUR PRINCIPLE

CONCEPTUAL FRAMEWORK

The need for understanding a conceptual framework

Main points

• What is conceptual framework?
• Purposes of a conceptual framework.
• The Absence of a conceptual framework.
• Enron company example.

What is conceptual framework?

1. A conceptual framework establishes the concepts that underlie financial reporting.
1. A conceptual framework must consider the theoretical and conceptual issues surrounding financial reporting and form a coherent and consistent foundation that will underpin the development of accounting standards.
   1. The concepts flow from the objectives and they represent a framework of principles underlying financial reporting.