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ACCA Strategic Professional · Strategic Business Reporting (International) · The applications, strengths and weaknesses of the accounting framework

A critic argues that the Conceptual Framework is weak because it is not itself an IFRS Accounting Standard. Which response is correct under the Framework?

The Framework is not an IFRS Standard and does not override any Standard. Its role is to guide the Board in setting Standards and to help preparers select accounting policies when no Standard specifically covers a transaction.

  1. ACorrect: the Framework overrides IFRS Standards where they conflict
  2. BIncorrect: the Framework is mandatory and entities must always apply it before any IFRS Standard
  3. CCorrect: the Framework only applies to public sector entities
  4. DIncorrect in part: the Framework is not a Standard and does not override one, but it guides the Board in developing Standards and helps preparers develop policies where no Standard appliesCorrect

Explanation

The Framework is not a Standard and nothing in it overrides a specific IFRS Standard. Its purposes include assisting the Board in developing Standards and helping preparers develop consistent policies when no Standard applies to a transaction. Options A and B wrongly give it overriding authority.

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