REVISITING THE CONCEPTUAL FRAMEWORK

The FASB and IASB have just begun a new joint agenda
project, to revisit their conceptual frameworks for financial
accounting and reporting. Each Board bases its accounting
standards decisions in large part on the foundation of objectives,
characteristics, definitions, and criteria set forth in their existing
conceptual frameworks. The goals of the new project are to build
on the two Boards existing frameworks by refining, updating,
completing, and converging them into a common framework that
both Boards can use in developing new and revised accounting
standards. A common goal of the FASB and IASB, shared by their
constituents, is for their standards to be principles-based. To be
principles-based, standards cannot be a collection of conventions
but rather must be rooted in fundamental concepts.For standards
on various issues to result in coherent financial accounting and
reporting, the fundamental concepts need to constitute a
framework

that

is

sound,

comprehensive,

and

internally

consistent.
Without

the

guidance

provided

by

an

agreed-upon

framework, standard setting ends up being based on the

individual concepts developed by each member of the standardsetting body. Standard setting that is based on the personal
conceptual

frameworks

of

individual

standard

setters

can

produce agreement on specific standard-setting issues only when

enough of those personal frameworks happen to intersect on that
issue. However, even those agreements may prove transitory
because, as the membership of the standard-setting body
changes over time, the mix of personal conceptual frameworks
changes as well. As a result, that standard-setting body may

reach significantly different conclusions about similar (or even

identical) issues than it did previously, with standards not being
consistent with one another and past decisions not being
indicative

of

future

ones.

That

concern

is

not

merely

hypothetical: substantial difficulties in reaching agreement in its

first standards projects was a major reason that the original FASB
members decided to devote substantial effort to develop a
conceptual framework.
The IASB Framework is intended to assist not only standard
setters but also preparers of financial statements (in applying
international financial reporting standards and in dealing with
topics on which standards have not yet been developed),
auditors (in forming opinions about financial statements), and
users

(in

interpreting

information

contained

in

financial

statements). Those purposes also are better served by concepts

that are sound, comprehensive, and internally consistent. (In
contrast, the FASB Concepts Statements state that they do not
justify changing generally accepted accounting and reporting
practices or interpreting existing standards based on personal
interpretations of the concepts, one of a number of differences
between the two frameworks.)
Another common goal of the FASB and IASB is to converge
their standards. The Boards have been pursuing a number of
projects that are aimed at achieving short-term convergence on
specific issues, as well as several major projects that are being
conducted jointly or in tandem. Moreover, the Boards plan to
align their agendas more closely to achieve convergence in
future

standards.

The

Boards

will

encounter

difficulties

converging their standards if they base their decisions on

different frameworks.

The FASBs current Concepts Statements and the IASBs

Framework, developed mainly during the 1970s and 1980s,
articulate concepts that go a long way toward being an adequate
foundation

for

principles-based

standards.

Some

of

our

constituents accept those concepts. Others do not. This paper

discusses those concepts, why the Boards found them superior to
alternatives, and how the Boards have found them helpful in
making decisions. Although the current concepts have been
helpful, the IASB and FASB will not be able to realize fully their
goal of issuing a common set of principles-based standards if
those standards are based on the current FASB Concepts
Statements

and

IASB

Framework.

That

is

because

those

documents are in need of refinement, updating, completion, and

convergence.
The planned approach in the joint project will identify
troublesome issues that seem to reappear time and time again in
a variety of standard-setting projects and often in a variety of
guises. That is, the focus will be on issues that cut across a
number of different projects. Because it is not possible to address
those cross-cutting issues comprehensively in the context of any
one standards-level project, the conceptual framework project
provides a better way to consider their broader implications,
thereby assisting the boards in developing standards-level
guidance.
As noted in the chapter, the boards have issued and
received comments on an exposure draft relating to phase a
objectives and qualitative characteristics. A discussion paper
relating to phase d reporting entity had been issued and work is
continuing on phase B elements and recognition and phase C
measurement.

Question:
1. Explain why principle-based standards require a conceptual
framework ?
2. Why it is important that the IASB and FASB share a
common conceptual framework ?
3. It is suggested that several parties can benefit from a
conceptual framework. Do you consider that a conceptual
framework is more important for some parties than others?
4. What is meant by a cross cutting issue? Suggest some
possible examples of cross cutting issues!

Answer:
1. Principle based sendiri berarti bahwa standar yang ada
lebih condong kepada judgement. Berbeda dengan rule
based yang mengikat dengan aturan-aturan yang ketat.
Sehingga dibutuhkan conceptual framework yang kuat
dalam penyusunan standar yang berbasis principle based.
Agar area judgement yang ada pada principle based tidak
bias dan tidak keluar dari koridor-koridor akuntansi.

2. Sangat penting bagi IASB dan FASB untuk menyusun

conceptual framework yang sama. Karena pada dasarnya
kedua

badan

ini

memiliki

tujuan

yang

sama

untuk

membuat standard yang umum bagi dunia internasional.

Sehingga sangat penting untuk menyamakan conceptual
framework mereka agar mempunyai dasar yang sama
dalam menyusun standar akuntansi.

3. Menurut kelompok kami, Ya Conceptual framework bisa

saja menjadi lebih menguntungkan beberapa pihak. Karena
ada

pihak

yang

lebih

diuntungkan

dengan

sebuah
4

conceptual framework yang di susun. Penyusunan suatu

conceptual framework juga tak lepas dari politik dan begitu
juga halnya dengan penyusunan standar akuntansi.
4. Maksud dari cross cutting adalah issue yang diabaikan
dalam proses penyusunan conceptual framework. Sehingga
issue-issue yang diabaikan ini juga harus diperhatikan
dalam proses penyusunan conceptual framework oleh IASB
dan FASB.