Developing a conceptual framework is an impossible possibility Essay - 2

Developing a conceptual framework is an impossible possibility - Essay Example Conceptual frameworks have been constantly changed from them. However, individual organizations have come up with their own conceptual frameworks that suit specific organizational needs. A conceptual framework provides an over view of how things should be done in an organization. It is a coherent system of related objectives and fundamentals that should lead to consistent standards that prescribe the nature, function, and limits of financial accounting and financial statements.† (Foulks Lynch 1998) A conceptual framework development takes time. The worst part is that once it is ready, hardly any of those principles are applied since the dynamic economic environment will be experiencing other challenges. Conceptual framework is like a constitution in financial accounting that stipulates its nature, function and its limits. The International Accounting Standards Board (IASB) also came up with an internationally recognized conceptual framework, which aims at streamlining the accou nting principles worldwide. This promotes external investments. The second function of the conceptual framework is to solve any emerging problems in the accounting sector. This explains why the boards are constantly reviewing the conceptual framework to suite the new challenges. ... The risk of not having a conceptual framework is the cropping up of haphazard standards. Without standards, businesses will even come up with their own frameworks that give them an advantage over others. This will lead to inconsistence in the basic principles. A strong conceptual framework will shield the financial sector from manipulation by other powerful forces such as the politicians and other interested parties. The process of developing a conceptual framework is done through a long deliberation among the board members. A good framework forms a good basis for a company. The advantages of a conceptual framework are as follows. It establishes standards that are logical and consistent. The CF stipulates rules and policies on how certain things should be carried out. The company will not just act anyhow, but it will be guided by certain rules, which maintain standardization. The conceptual framework provides rules to be followed when no other accounting principle can be applied. In accounting, rules are followed to the letter, but in some cases, there are no rules. The conceptual framework will come in; though most of its rules are general, they deal with all aspects of accounting. A conceptual framework builds the public trust in accounting. Financial reports and statements are known to be credible. This is because the public knows that there are bodies that set principles to govern them. Other advantages of the conceptual framework include avoiding conflict between user groups and ensuring accountability. The demerit of the conceptual framework is that it does not address the needs of the diverse users. There is no conceptual framework that can address the needs of everybody, and that is