Conceptual Framework for Financial Reporting 2018 (IFRS Framework) - still applies in 2025

Summary

In this video, Silvia from CPDbox provides an engaging overview of the IFRS Conceptual Framework for Financial Reporting issued in 2018. This framework plays a crucial role in guiding the preparation and presentation of financial statements. Silvia discusses its evolution from its inception in 1989 through subsequent amendments, leading to the final 2018 version. The framework comprises eight comprehensive chapters, each detailing specific elements ranging from the objectives of financial reporting to the concepts of capital maintenance. Silvia's explanation is detailed yet accessible, making it ideal for anyone seeking to understand or apply IFRS standards effectively.

Highlights

• Learn about the historical evolution of the IFRS conceptual framework since 1989! 🕰️
• The framework consists of eight chapters, each addressing a different aspect of financial reporting. 📑
• Silvia shares insights into both the fundamental and enhancing qualitative characteristics of financial information. 🧠
• Understand the importance of recognition and derecognition in financial statements. 📈
• Discover the measurement bases for monetary amounts in financial statements, including historical cost and current value. 💸

Key Takeaways

• The IFRS framework has evolved since 1989, with significant updates finalized in 2018. 📅
• Financial information must be relevant and faithfully represent what it claims. 📊
• Chapters cover everything from financial reporting objectives to capital maintenance concepts. 📚
• Silvia provides a user-friendly breakdown of complex IFRS standards. 👩‍🏫
• IFRS standards are essential for preparing and presenting financial statements. 📋

Overview

Silvia kicks off the video by introducing the IFRS Conceptual Framework, a fundamental document for those involved in financial reporting. She traces its evolution from its initial release in 1989 through to the polished 2018 version. Silvia highlights the importance of this framework in providing clear guidelines for preparing financial statements across different entities and situations.

As the video progresses, Silvia delves into the eight chapters of the framework. Beginning with the objectives of financial reporting, she guides the viewer through elements such as the qualitative characteristics of financial information, financial statements and the reporting entity, and recognition versus derecognition. Silvia's explanations are easy to follow, making complex concepts accessible to a wide audience.

Silvia concludes with an exploration of measurement, presentation, and disclosure in financial reporting, wrapping up with a discussion on capital and capital maintenance. Her dynamic presentation style and detailed explanations ensure viewers walk away with a solid understanding of the IFRS framework. This video serves as an invaluable resource for financial professionals eager to enhance their IFRS knowledge.

Chapters

• 00:00 - 00:30: Introduction to IFRS Conceptual Framework The chapter provides an introduction to the IFRS Conceptual Framework, which is a significant document in the world of International Financial Reporting Standards (IFRS). The framework was notably issued in 2018 and serves as a fundamental resource for understanding and applying IFRS. Sylvia, from ifsb box.com, guides viewers to a platform that offers comprehensive resources for learning IFRS, including the IFRS kit and other free materials. The video also mentions the original framework release in 1989, setting the historical context for its development and ongoing relevance.
• 00:30 - 01:00: History and Development of the Framework This chapter discusses the evolution of the conceptual framework for financial reporting. The initial framework, related to financial statement presentation, faced amendments by the International Accounting Standards Board, leading to a revised and unfinished framework debuting in September 2010 with a fresh title. The framework remained incomplete for years until March 2018, when its final, comprehensive version was released. The updated framework comprises eight chapters, offering an extensive overview of its development.
• 01:00 - 01:30: Objective of General Purpose Financial Reporting The first chapter focuses on the objective of general-purpose financial reporting, aiming to provide financial information about a reporting entity. This information should be useful to existing and potential investors, lenders, and other creditors to aid in decision-making processes, such as trading equity and debt instruments or providing loans. The chapter also explores what financial information should be included in general-purpose financial reports.
• 02:00 - 03:00: Qualitative Characteristics of Financial Information The chapter focuses on the qualitative characteristics of financial information, emphasizing the importance of presenting information about an entity's economic resources and claims. Financial position is discussed in terms of changes in economic resources and claims resulting from entity financial performance and other events. The chapter highlights that financial performance should be reflected via accrual accounting, recognizing the effects of transactions as they occur, independent of the related cash flows.
• 03:30 - 05:30: Financial Statements and Reporting Entity The chapter emphasizes the importance of understanding past cash flows to evaluate management's capacity for generating future cash flows.
• 05:30 - 07:00: Elements of Financial Statements The chapter highlights key elements of financial statements with a focus on two primary attributes: relevance and faithful representation. It discusses the importance of providing financial information that can influence users' decisions, emphasizing that such information should not omit material details to ensure relevance. Additionally, faithful representation is addressed, mandating that financial statements should accurately depict what they claim to represent, embodying completeness, neutrality, and freedom from error.
• 07:00 - 08:30: Recognition and Derecognition This chapter discusses key characteristics of financial information, focusing on recognition and derecognition. It highlights fundamental qualities like comparability, verifiability, and timeliness. Comparability allows assessment across different entities or time periods, verifiability ensures that independent and knowledgeable observers can confirm the information, and timeliness ensures that information is provided in time to influence the decisions of users.
• 08:30 - 10:00: Measurement of Financial Statements Elements Chapter 3 focuses on the financial statements and the reporting entity. It discusses the importance of presenting information clearly and concisely to ensure understandability. It addresses the statement of financial position, emphasizing the recognition of assets, liabilities, and equity within these financial statements.
• 10:00 - 11:30: Presentation and Disclosure The chapter 'Presentation and Disclosure' deals with the statement of financial performance, focusing on the recognition of income and expenses. It also covers how to present information about recognized and unrecognized assets, other elements of the financial statements, and cash flows. Additionally, it discusses contributions from and distributions to shareholders, including the assumptions, methods, judgments, and estimates used in financial reporting. It emphasizes the importance of preparing financial reports for a specified period.
• 11:30 - 13:00: Concepts of Capital and Capital Maintenance The chapter discusses the concepts of capital and capital maintenance, focusing on the importance of the going concern assumption. It clarifies that if an entity is assumed to continue operations in the foreseeable future, the going concern assumption applies. On the other hand, if an entity is not a going concern, it should report under different bases or methods. The chapter references a Q&A session on IFRS box.com that specifically addresses reporting when not operating as a going concern.

Conceptual Framework for Financial Reporting 2018 (IFRS Framework) - still applies in 2025 Transcription

• 00:00 - 00:30 hi and welcome to today's video in which I sum up the very basic document in IFRS conceptual framework as issued in 2018 I'm Sylvia of ifsb box.com the place to be if you want to understand and apply IFRS easily I have created the IFRS kit a comprehensive IFRS learning platform for you plus lots of free materials so you're welcome to check them out at ibx.com well in 1989 the framework for the preparation
• 00:30 - 01:00 and presentation of the financial statements was issued but then International Accounting Standards Board made amendments to it and the new although unfinished framework was issued in September 2010 with a new name the conceptual framework for financial reporting and it stayed in progress for many years and then in March 2018 the final version was issued with everything completed so let's take a look while the new framework has eight chapters in total and here's the list and we will
• 01:00 - 01:30 take a closer view at each chapter so the first one is about the objective of general purpose financial reporting which is to provide financial information about the reporting entity that is useful to existing at potential investors lenders and other creditors to make various decisions for example about trading with equity and debt instruments providing loans and so on so what financial information shall be reported in the general purpose report reports
• 01:30 - 02:00 well note that we are not talking about the financial statements yet because they are subject to chapter 3 so the entity shall present the information about its economic resources and claims which is basically a financial position then changes in economic resources and claims resulting from entity financial performance and from other events while financial performance shall be reflected by the acral accounting so in the periods when the effects of the transaction occur regardless the related
• 02:00 - 02:30 cash flows however information about past cash flows is very important to assess Management's ability to generate future cash flows chapter two discusses qualitative characteristics of the financial information so that the information is really useful for its users and there are two types of characteristics fundamental and enhancing the First Fundamental characteristic is relevance so relevant
• 02:30 - 03:00 financial information is capable of making a difference in the decisions made by the users and here the concept of materiality applies so the material information should not be omited and the second fundamental characteristics is faithful representation and financial information must not only be relevant but must Faithfully represent what it aims to represent so therefore it must be complete neutral and free from error
• 03:00 - 03:30 and financial information shall have both fundamental characteristics enhancing characteristics are comparability so information should be comparable between different entities or time periods then verifiability independent and knowledgeable observers are able to verify the information timeliness information is available in time to influence the decisions of users and
• 03:30 - 04:00 understandability so the information shall be classified presented clearly and concisely and enhancing characteristics shall be applied to the maximum possible extent chapter three is about the financial statements and the reporting entity so here we are focusing on the financial statements not just the reporting itself so the relevant information is provided in the statement of financial position by recognizing assets liabilities and equity in the
• 04:00 - 04:30 statement of financial performance by recognizing income and expenses and in other statements where you show the information about recognized and unrecognized assets and other elements of the financial statements cash flows contributions from and distributions to shareholders assumptions methods used judgments applied estimates and other relevant information Financial reports are always prepared for a specified period period
• 04:30 - 05:00 of time or the reporting period and going concern assumption applies well it means that an entity will continue its operations in the foreseeable future and will not liquidate or materially curle operations well if you're not a going concern then you should report under different bases and you can check out IFRS box.com I have one Q&A session where I answer specifically how to report when you're not going con concern
• 05:00 - 05:30 okay then chapter three speaks about the concept of a reporting entity and that is an entity that must or chooses to prepare financial statements and this entity can be single entity one company or even a portion of an entity for example some division of one company or more than one entities for example parent and its subsidiary as a result we have few types of financial statements Consolidated where parent subsidiary provide
• 05:30 - 06:00 information as a single reporting entity unconsolidated where parent alone provides the financial information and even combined financial statements if reporting entity comprises two or more entities not linked by parent subsidiary relationship chapter four is about elements of the financial statements and they can relate to the financial position here we have assets liabilities and equity and another elements relate
• 06:00 - 06:30 to financial performance and these are income and expenses and then the framework defines each element and provides examples it is very extensive chapter full of details and lays good foundation to build upon so if You' like to learn more about it then please check out ifsb box.com chapter five is about recognition and D recognition recognition means inclusion of an element into financial statements when when it meets the definition and it
• 06:30 - 07:00 links the elements in the statement of financial position and the statement of financial performance as follows well in the statement of financial position at the beginning and at the end of the reporting period assets minus liabilities equal equity and we have also income minus expenses recognized in the statement of financial performance and contributions from and distributions to holders of equity and these two items
• 07:00 - 07:30 are recognized changes during the period D recognition is the removal of all or part of recognized asset or liability from entity statement of financial position and framework sets a number of criteria for both recognition and D recognition chapter six talks about the measurement so while recognition means when or whether to recognize measurement means in what amount to recognize more
• 07:30 - 08:00 specifically the selection of measurement bases well which is a way of measuring monetary amount for elements of financial statements and the framework discusses two basic measurement bases which is historical cost that's basically the transaction price at the time of recognition of the element and the second one is current value which measures the element updated to reflect the conditions at measurement date and here it includes fair value
• 08:00 - 08:30 value in use and current cost framework then discusses many factors to consider when you're selecting the appropriate measurement basis and most important is to make sure that the financial information is relevant and provides faithful representation of the financial performance and position well but there are also factors specific to initial recognition enhancing characteristics and other that are discussed by the framework in detail chapter seven is about the presentation and disclosure so
• 08:30 - 09:00 presentation and disclosure are communication tools and in order to make the communication effective it requires focusing on presentation and disclosure objectives and principles not the rules and then classifying the information so that similar items are grouped and dissimilar ones are separated and here the framework speaks about offsetting classification of equity income and expenses and other items and finally
• 09:00 - 09:30 aggregating information but need to prevent too many unnecessary details and also the opposite extreme over agregation and then all these concepts are discussed in detail finally chapter number eight is about concepts of capital and capital maintenance and is essentially copied from previous version of framework so nothing new here well framework explains two concepts of Capital Financial capital is synonymous with with the net assets of equity of
• 09:30 - 10:00 the entity and under the financial Capital maintenance concept the profit is earned only when the amount of net assets at the end of the period is greater than the amount of net Assets in the beginning after excluding contributions and distributions with Equity holders and this financial Capital maintenance can be measured either in some nominal monetary units or units of constant purchasing power physical capital is regarded as
• 10:00 - 10:30 the productive capacity of the entity based on for example units of output per day and here the profit is earned when if physical productive capacity increases during the period of course after excluding the movements with Equity holders and a main difference between these Concepts is how the entity treats the effect of changes in prices of assets and liabilities so that was the short summary of the new conceptual framework as issued in 2018 and if you need to
• 10:30 - 11:00 learn more you're very welcome to check ibx.com thanks for watching