Conceptual Framework Essay Example | Topics and Well Written Essays - 2500 words

Conceptual Framework - Essay Example Apart from the public versus private project distinction there is very little to differentiate between them. Current accounting and auditing practices are basically centered on the primary and immediate concerns of the practitioners, i.e. accountants and auditors presume the importance of rule-based accounting practices to be the ultimate aim so that failures can be disregarded as technical variances. In other words compliance with accounting and auditing rules is of primary and immediate concern to the practitioner. The significance of this outcome is essentially seen in the modern compliance-centric accounting environments where hierarchically organized structures exert an extraordinary amount of pressure on the average accountant/auditor to comply with norms that have very little if any to do with such broader and more important concepts like corporate governance, quality of accounting and auditing practices, audit judgment, auditor behavior, business forensics concerning auditing and the corporate pricing policy of audits. Thus the inevitable outcome is that CF projects fail and despite these failures they are being undertaken purely in conformance with standard setting behavioral tendencies of boards and other governing bodies. The Board should decide often whether a piece of data should be recognized in the financial statements, when such an item should be recognized, and at what amount it should be recognized. The Board has depended on the conceptual framework of other standards setters and analogous examples from practice or previous standards to make such decisions in the past. This technique of decision making tends to give rise to certain inconsistencies in financial reporting standards and could bring about too much dependence being placed on accounting concepts which were not developed for a governmental environment (Taylor, & Dezoort, 2003). Analysis Therefore, the project on recognition and measurement attributes is necessary to give the GASB with conceptual guidance as to when elements of financial statements should be reported in particular financial statements and at what amount. This will bring about developing recognition criteria and will be inclusive of a discussion of when elements of financial statements are recognized using different measurement focuses. For the GASB to make consistent financial reporting decisions, it is needed to have (1) definitions of the elements of financial statements, (2) a method of finding out when elements of financial statements should be realized in the financial statements, and (3) a method for determining which measurement attribute (for example, historical cost or fair value) is suitable for reporting the elements. The GASB in recent times issued a Concepts Statement on the definitions for the elements of financial statements, and a conceptual framework project on recognition and measur ement attributes is needed to complete the conceptual basis for reporting items in traditional financial statements. I. Deficiencies in Financial reporting practices What messages are financial statements conceptually trying to put forward (That is, what is the story that the financial