FN0248 Conceptual Frameworks for Financial Reporting

Synopsis of Module

This module reviews the normative accounting theory literature and alternatives to the conventional financial reporting model with a view to contextualising and evaluating the conceptual frameworks developed by accounting standard setting bodies in the UK, USA and internationally.

The module will assess the conventional financial reporting model, in the context of proposed alternatives and the main current conceptual frameworks.

Teaching and learning is via lectures and seminars. Assessment is by means of a two hour closed book examination.

Aims of Module

The aims of this module are to:

1.	To introduce students to the body of normative accounting theory literature.

2.	To enable students to evaluate the role of a generally agreed conceptual framework for preparers, assurers and users of accounting information.

3.	To consider in detail the work of the FASB, the IASB, the professional accountancy bodies, and the ASB in developing an agreed conceptual framework.

4.	To enable students to critically assess the current financial reporting model and proposed alternatives.

Learning Outcomes

At the end of this module students should be able to:

1.	Appraise the need for a conceptual framework for financial reporting with particular reference to setting accounting standards;

2.	Compare and contrast alternative reporting models developed in the normative accounting theory literature;

3.	Discuss and evaluate the conceptual frameworks developed by the FASB, the IASB and the ASB;

Outline Syllabus

The need for, nature and function of a generally agreed conceptual framework.

Early development work in the UK and USA.

The FASB's Conceptual Framework programme.

The IASB's Framework for the Presentation of Financial Statements

The development of a conceptual framework in the UK: The Corporate Report, the Sandilands Report, the Macve Report, 'Making Corporate Reports Valuable', The Solomons Report

The ASB's Statement of Principles

Revenue Recognition, realised and unrealised profits.

Accruals, matching and the allocation problem.

Alternative reporting systems: historic cost accounting, economic value, current value systems (replacement cost accounting, net realisable value, current cost).

Inflation accounting systems, current purchasing power accounting. Reporting in hyperinflationary economies.

Mixed value systems, Chambers and CoCoA.

Cash flow accounting

Summative assessment

Assessment A: Unseen Closed Book Examination (2 hours)

The weighting of this assessment is 100%