The qualitative characteristics that determine the usefulness of information provided in financial statements;
Definition, recognition and measurement of the elements from which financial statements are constructed; and
Concepts of capital and capital maintenance.
This Framework is concerned with general purpose financial statements which are prepared at least annually and are directed toward the common information needs of a wide range of users. Some of such users may require, and have power to obtain other information in addition to that contained in the financial statements. However, many users have to rely on the financial statements as their major source of financial information and such financial statements should, therefore, be prepared and presented with their needs in view. Special purpose financial reports, for example prospectuses and computations prepared for taxation purposes, are outside the scope of this Framework. However, this framework can be applied in preparation of such special purpose reports where their requirements permit.
Financial Statements form part of the process of Financial Reporting. A complete set of Financial Statements normally includes a Balance Sheet, a Statement of Profit and Loss (Also commonly referred as income statement), a Cash Flow statement and those notes and other statements as well as explanatory material that are an integral part of the Financial Statements. They may also include supplementary schedules and information based on or derived from, and expected to be read with, such statements. Such schedules and supplementary information may deal with, for example, with financial information about business and geographical segments, and disclosures about the effects of changing prices. However, such items as reports by directors, statements by the Chairman, discussion and analysis by management and similar items that may be included in a financial or annual report, are not included in meaning of financial statements.
This Framework applies to the Financial Statements of all reporting enterprises engaged in commercial, industrial and business activities, whether in the public or in the private sector. A reporting enterprise is an enterprise for which there are users who rely on the financial statements as their major source of financial information about the enterprise.
While all information needed by these users cannot be met by Financial Statements, there are needs which are common to all users. As providers of risk capital to the enterprise, investors need more comprehensive information that other users. The provision of financial statements that meet their needs will also meet most of the needs of other users that financial statements can satisfy.
The Management of an Enterprise has the responsibility for the preparation and presentation of the Financial Statements of the Enterprise. Management is also interested in the information contained in the Financial Statements even though it has access to additional management and financial information that helps it carry out its planning, decision-making and control responsibilities, Management has the ability to determine the forma and content of such additional information in order to meet its own needs. The reporting of such information, however, is beyond the scope of this Framework.
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