Evaluate the role played by the International Accounting Standards Board’s Conceptual Framework (2010) in ensuring a high quality, principles-based international financial reporting system

The primary objective of financial reporting as set out in the IASB’s Conceptual Framework is to provide financial information to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity; to enable efficiency of operation of capital markets and To ensure investors’ and lenders’ confidence and trust.

High quality financial reporting appears when companies are having good internal financial accounting and reporting systems with sound internal controls to start with; methods of accounting (through accounting standards) to deal with specific items and transactions based on sound underpinning principles and concepts included in the Conceptual Framework; and finally a high quality audit with its own standards and ethical requirements.

The qualitative characteristics describe the nature of the information provided. Fundamental characteristics are necessary for financial information to be useful, in other words it must be relevant and faithfully represent what it purports to represent. The usefulness of financial information is enhanced if it is comparable, verifiable, timely and understandable.

The two fundamental characteristics involve:
Relevance
Relevant financial information is capable of making a difference in the decisions made by users. Information may be capable of making a difference in a decision even if some users choose not to take advantage of it or are already aware of it from other sources. Financial information can make a difference to decisions if it has:
· Predictive value – It can be used to predict future outcomes.
· Confirmatory value – It provides feedback about previous evaluations