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CA Final · Financial Reporting · Conceptual Framework for Financial Reporting under Indian Accounting Standards (Ind AS)

A analyst at an investment firm reads that Ind ASs based on the Conceptual Framework contribute to accountability. According to the framework, how do they strengthen accountability?

Ind ASs based on the Conceptual Framework strengthen accountability by reducing the information gap between providers of capital and the people to whom they have entrusted their money. They provide the information needed to hold management to account, and are also valuable to regulators.

  1. ABy reducing the information gap between providers of capital and those entrusted with their money, and by providing information needed to hold management to accountCorrect
  2. BBy guaranteeing that management earns profits for capital providers
  3. CBy replacing the need for audit of financial statements
  4. DBy fixing the tax payable by entities on reported profits

Explanation

The framework says Ind ASs strengthen accountability by reducing the information gap between capital providers and the people entrusted with their money, providing information needed to hold management to account. The other options describe matters not stated in the framework.

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