Conceptual Framework KDPPLK

Fadilla Primaria Dewi - 1406612256

Is about basic framework to formulize a concept which underlie financial statement

making and presentation for external user. The objective of the framework is to be used by
accounting standard maker, financial statement maker, auditor, and financial statement user.
Conceptual framework is not accounting standard because it is not defining as standard of
disclosure and measurement. Basic framework discusses about objective of financial statement,
qualitative characteristic, definition, disclosure, and measurement of financial statement, and
concept of financial statement. The conceptual framework provides basic financial reporting
objectives, fundamental accounting and financial statement concepts, and ways to measure
accounting information, recognize financial events and report them in the accounting system. It
facilitates the generation of useful accounting information to those making investment and credit
decisions in a way that helps them understand a company's economic resources, the claims to
them and the changes in them. The framework also assumes a reasonable level of competence
on the part of users in understanding the related accounting matters. From the explanation can
be conclude that a conceptual framework can be defined as a system of ideas and objectives
that lead to the creation of a consistent set of rules and standards. Specifically, in accounting,
the rule and standards set the the nature, function and limits of financial accounting and
financial statements.
The conceptual framework is important because it provides a framework for setting
accounting standards, a basis for resolving accounting disputes, fundamental principles which
then do not have to be repeated in accounting standards. It makes the accounting standard
maker able to issue consistent and useful standards. The conceptual framework plays an
important role in setting and issuing accounting standards and rules, which should be built on an
established body of concepts and objectives. Without the use of a common accounting
language among all constituents, rule-setting bodies may issue new standards in a random
fashion, which can be detrimental to the dissemination of useful financial accounting
information. Moreover, it is not possible to resolve any new problems that emerge without an
existing set of standards. The framework also increases financial statement users
understanding of and confidence in financial reporting and makes it easier to compare different
companies financial statements. Conceptual framework is like a foundation of accounting
standard and the output is financial statement.
The framework keeps the financial statement has its qualitative characteristic which are
understandable, relevant, reliable, and comparable. In addition, other financial statements
element has to fulfill the conceptual framework to keep other elements consistent. In time,
maybe there will be clash between accounting standard and conceptual framework, then
accounting standard have to be relatively prioritize first. But since conceptual framework is act
as basic for accounting standard maker and its revision, so the problem will continuously vanish
from time to time. The conceptual framework in accounting increases financial statement users'
understanding of and confidence in companies' financial reports. Knowing that companies'
financial statements are prepared in connection with a set of universal accounting standards
and rules, investors and creditors can make decisions based on the face value of the financial
information received. Understanding the framework, users of financial statements can better
interpret any changes in accounting standards and rules, as well as different practices adopted
by companies, which in turn helps with their financial statement analysis.
A company should apply conceptual framework as basic idea to understand accounting
standard and helps company to apply the accounting standard consistent with conceptual
framework. Also, conceptual framework is a way to resolve any accounting disputes that may
rise in the future. The conceptual framework also provides comparability and consistency of
financial statements. By using the same conceptual framework, companies benefit from
increased efficiency and better communication in the process of their financial reporting. The
framework also enables companies to quickly resolve emerging practical accounting issues by
referencing basic principles. We may conclude that conceptual framework is very important for
accounting users, starts from accounting standard maker, investor, auditors, and company who
apply conceptual framework as basic idea of accounting standards.