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

A listed company's board is told that the Conceptual Framework for Financial Reporting under Ind AS provides the foundation for Ind AS that strengthen accountability. Which description best reflects how the Conceptual Framework says such Ind AS strengthen accountability?

Ind AS 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, and by providing the information needed to hold management to account. Cost of capital and capital allocation relate to economic efficiency.

  1. ABy reducing the information gap between providers of capital and the people to whom they have entrusted their money, and providing information needed to hold management to accountCorrect
  2. BBy guaranteeing that management earns a minimum return for the entity's shareholders each year
  3. CBy lowering the cost of capital through the use of a single accounting language
  4. DBy helping investors to identify opportunities and risks across the world and so improve capital allocation

Explanation

The accountability limb refers to reducing the information gap between capital providers and those entrusted with their money and providing information needed to hold management to account. Lowering the cost of capital and improving capital allocation belong to the economic efficiency limb. A guaranteed return is not claimed anywhere.

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