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ACCA Applied Skills · Financial Reporting · The need for a conceptual framework and the characteristics of useful information

Which of the following statements about the status of the IASB's Conceptual Framework for Financial Reporting is correct?

The Conceptual Framework is not an IFRS Standard. If a specific Standard conflicts with it, the Standard prevails. Its role is to guide the IASB in developing standards and to help preparers develop policies where no Standard applies to a transaction.

  1. AIt overrides an IFRS Accounting Standard if the two conflict
  2. BIt is not itself a Standard, and where an IFRS Standard conflicts with it, the Standard prevailsCorrect
  3. CIt must be applied in full by all entities in place of IFRS Standards
  4. DIt sets out detailed measurement rules for each class of asset

Explanation

The Framework is not a Standard and does not override any specific Standard or requirement. Where a Standard conflicts with the Framework, the Standard prevails. Option A reverses this, and the Framework gives concepts, not detailed rules for each asset class.

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