Framework in general is a statement of generally accepted theoretical principles which form the frame of reference for a particular field of enquiry.
Framework in financial reporting will form the theoretical basis(Eg. Balance sheet, p&l etc) for determining - which events should be accounted for, - how they should be measured, - how they should be communicated to the user.
Purpose of Framework
- Assist in Development of Future Ind AS & Review of existing Ind AS
- Helping people in applying Ind AS and dealing with matters not yet part of Ind AS
- Helping users in interpreting financial statements prepared as per Ind AS
- Assist auditor in forming opinion on financial statements prepared as per Ind AS
- Helping users with formulation of Ind AS
- Reducing alternative accounting treatments to increase comparability.
Scope of Framework
- Purpose for which financial statements are prepared.
- Qualitative characteristics that determine the usefulness of the information in financial statements
- Definition, recognition and measurement of elements of financial statements.
- Concepts of capital and capital maintenance.
Important facts about the framework
- Framework is not Ind AS and hence does not define standards for measurement or disclosure
- In case of Ind AS contradicting with framework, Ind AS will prevail.(Very rare)
- All future Ind AS will be based on framework to avoid contradictions
- Framework will be adaptive in nature and change as per industry requirements
Source: ICAI Study Material
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