Are there any accounting concepts?

The very first sentence of the Conceptual Framework for Financial Reporting [1] is clear:

“The Conceptual Framework for Financial Reporting (Conceptual Framework) describes the objective of, and the concepts for, general purpose financial reporting.”

But Conceptual Framework only states three rather obscure ‘concepts’. Concepts of Capital, Concepts of Capital Maintenance and Measurement Concepts.  That’s all!

Does this mean only three accounting concepts exist?  Concepts of capital are important but the other two are rather obscure.

The odd peculiar aspect of this document is the board’s affirmation that it describes the concepts for general purpose financial reporting. BUT only these three are specifically named. Are other accounting concepts so obvious that there is no need to state them as concepts? Or is it up to the reader to guess what they are? Maybe the reader just knows. Perhaps it doesn’t matter.

In section 1.11 the IASB do give us a clue to identify the concepts they have not specified. They state that financial reports are based, mostly on estimates, judgements and models, and they then add:

“The Conceptual Framework establishes the concepts that underlie those estimates, judgements and models.”

So each time an estimate, a judgements or a model is mentioned the reader merely has to look for the concept behind it.  In theory this is clear, but then in the sentence after they mess it up completely by stating:

“The concepts are the goal towards which the Board and preparers of financial reports strive.”

I suppose they mean that the combined concepts make up the overall goal for the preparation of financial reports, but to state that ‘concepts are a goal’ is odd peculiar.

So there you are. Accounting concepts are not clearly identified; the reader has to search them out, combine them together to discover the goal of preparing financial reports under IFRS.

[1] Conceptual Framework for Financial Reporting, issued by the International Accounting Standards Board in September 2010 and revised in March 2018.

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