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

During a training session at Anand Infra Ltd, a manager says the Conceptual Framework contributes to accountability. Which description best matches how the Framework's stated foundation for Ind AS strengthens accountability?

Accountability is strengthened because Ind ASs based on the Conceptual Framework reduce the information gap between providers of capital and the people entrusted with their money, and supply the information needed to hold management to account. Capital allocation and comparability relate to efficiency and transparency.

  1. ABy lowering the cost of capital through use of a single accounting language
  2. BBy reducing the information gap between providers of capital and those entrusted with their money, giving information to hold management to accountCorrect
  3. CBy enabling investors to identify opportunities and risks across the world, thus improving capital allocation
  4. DBy enhancing international comparability and quality of financial information

Explanation

The Framework says Ind ASs strengthen accountability by reducing the information gap between providers of capital and the people to whom they have entrusted their money, and by providing information needed to hold management to account. The other options describe the other two contributions: economic efficiency (capital allocation, lower cost of capital) and transparency (comparability and quality).

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