01 - ASC Framework DOC

Title	01 - ASC Framework
Author	Leislei Rago
Pages	1
File Size	92.5 KB
File Type	DOC
Total Downloads	48
Total Views	508

Summary

Page 1 of 8 REVIEW OF FINANCIAL ACCOUNTING THEORY AND PRACTICE FRAMEWORK FOR THE PREPARATION AND PRESENTATION OF FS PURPOSE AND STATUS  The Framework sets out the concepts that underlie the preparation and presentation of financial statements for external users.  The purpose of the framework is to...

Description

Page 1 of 8 REVIEW OF FINANCIAL ACCOUNTING THEORY AND PRACTICE FRAMEWORK FOR THE PREPARATION AND PRESENTATION OF FS PURPOSE AND STATUS The Framework sets out the concepts that underlie the preparation and presentation of financial statements for external users. The purpose of the framework is to assist The ASC – 1) in developing accounting standards that represents GAAP in the Phils. - 2) in its review and adoption of existing IAS Preparers of FS - 3) in applying ASC SFAS and in dealing with topics that have yet to form the subject of an ASC Statement Auditors - 4) in forming an opinion as to whether FS conform with Phil. GAAP Users of FS - 5) in interpreting the information contained in FS prepared in conformity with Phil. GAAP; and 6) to provide those interested in the work of ASC with information about its approach to the formulation of SFAS. The framework is not an SFAS. In case of conflict between the Framework and SFAS, the requirements of SFAS prevail. SCOPE The Framework deals with: a) The objective of FS; b) The qualitative characteristics that determine usefulness of information in the FS; c) The definition, recognition and measurement of the elements from which FS are constructed; and d) Concepts of capital and capital maintenance. The framework is concerned with general-purpose FS including consolidated FS. FS are prepared at least annually and directed toward common information needs of a wide range of users. Complete set of FS includes: balance sheet, income statement, statement of changes in equity, cash flow statement and notes to FS (modified per SFAS/IAS 1) The Framework applies to the FS of all commercial, industrial and business reporting enterprises, whether in the public or private sectors. Reporting enterprise – an enterprise for which there are users who rely on the FS as their major source of financial information about the enterprise. USERS AND THEIR INFORMATION NEEDS a) Investors d) Customers b) Employees e) Governments and their agencies c) Lenders f) Public d) Suppliers and other trade creditors Management has primary responsibility for the preparation and presentation of FS. THE OBJECTIVE OF FS The objective of FS is to provide information about the financial position, performance and changes in financial position (cash flows). FS prepared for this purpose meet the common needs of most users. FS also show the results of the stewardship of management, or the accountability of management for the resources entrusted to it. The financial position of an enterprise is affected by: The economic resources it controls –useful in predicting the ability of the enterprise to generate cash and cash equivalents in the future. Its financial structure – useful in predicting borrowing needs and how future profits and cash flows will be distributed. - also useful in predicting how successful the enterprise is likely to be in raising further finance. Its liquidity and solvency – useful in predicting the ability of the enterprise to meet its financial commitments as they fall due. Liquidity refers to the availability of cash in the near future after taking into account financial commitments over this period. Solvency refers to the availability of cash over the longer term to meet financial commitments as they fall due....