‘Framework for the Preparation and Presentation of Financial Statements’ Summary

OVERVIEW

The conceptual framework applicable on adoption of Australian equivalents to International Financial Reporting Standards (IFRS) will be:

• SAC 1 ‘Definition of the Reporting Entity’;

• SAC 2 ‘Objective of General Purpose Financial Reporting’; and

• ‘Framework’ - Framework for the Preparation and Presentation of Financial Statements.

The existing Australian conceptual framework is provided in:

• SAC 1 ‘Definition of the Reporting Entity’;

• SAC 2 ‘Objective of General Purpose Financial Reporting’;

• SAC 3 ‘Qualitative Characteristics of Financial Information’; and

• SAC 4 ‘Definition and Recognition of the Elements of Financial Statements’.

SAC 1 and SAC 2 will continue to apply in order to provide guidance for the IFRS application paragraphs.

The ‘Framework’ will replace SAC 3 and SAC 4 which will be withdrawn. Although the ‘Framework’ is brief in comparison to SAC 3 and SAC 4, the concepts are similar with the key differences being that the ‘Framework’:

( includes prudence as a qualitative characteristic; and

( identifies two components to both income and expenses.

INTRODUCTION

The conceptual framework sets out the concepts underlying the preparation and presentation of general-purpose financial reports. The accounting standards, rules and guidance applicable under AASB 101 ‘Presentation of Financial Statements’ and AASB 108 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ are based on that framework.

If there is a conflict between the ‘Framework’ and an Australian equivalent to an International Financial Reporting Standard (IFRS), the requirements of the IFRS prevail.

The International Accounting Standards Board (IASB) ‘Framework for the Preparation and