Conceptual Framework for Financial Reporting

particular subset of primary users.
The management of a reporting entity is also interested in financial
information about the entity. However, management need not rely on general
purpose financial reports because it is able to obtain the financial information
it needs internally.
Other parties, such as regulators and members of the public other than
investors, lenders and other creditors, may also find general purpose financial
reports useful. However, those reports are not primarily directed to these
other groups.
To a large extent, financial reports are based on estimates, judgements and
models rather than exact depictions. The Conceptual Framework establishes the
concepts that underlie those estimates, judgements and models. The concepts
are the goal towards which the Board and preparers of financial reports strive.
As with most goals, the Conceptual Framework’s vision of ideal financial
reporting is unlikely to be achieved in full, at least not in the short term,
because it takes time to understand, accept and implement new ways of
analysing transactions and other events. Nevertheless, establishing a goal
towards which to strive is essential if financial reporting is to evolve so as to
improve its usefulness.
1.5
1.6
1.7
1.8
1.9
1.10
1.11
4
Throughout the Conceptual Framework, the terms ‘primary users’ and ‘users’ refer to those existing
and potential investors, lenders and other creditors who must rely on general purpose financial
reports for much of the financial information they need.
Conceptual Framework
A20
© IFRS Foundation

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Information about a reporting entity’s economic resources, claims
against the entity and changes in resources and claims
General purpose financial reports provide information about the financial
position of a reporting entity, which is information about the entity’s
economic resources and the claims against the reporting entity. Financial
reports also provide information about the effects of transactions and other
events that change a reporting entity’s economic resources and claims. Both
types of information provide useful input for decisions relating to providing
resources to an entity.