The Revised Conceptual Frameworks Effect on the Users of the Annuals Reports Allocation Basis

Abstract

This thesis is made with the purpose of examining how the changes to the conceptual framework, released in 2018, effects the information users annual report have available for making decisions. The conceptual framework is the framework that IASB uses when they are creating or updating existing International Financial Reporting Standards. As these standards decide what information can or must be included in financial reporting and how it must be included, changes to the standards have a direct impact on the users of the annual report. I have analyzed the effect on the information available to the users of the annual report, by considering which reporting paradigm the changes primarily lean on. In this regard I can conclude that the changes allow elements from both paradigms, both historical cost and present value. From a paradigm based perspective, the changes in the conceptual framework does not have an effect on the information available to the users of the annual report. I also tried to see if there was a general theme for the changes that would affect the users of the annual report, by theoretically applying the changes to an existing standard, in this case IAS 38. I found that the changes in definitions for assets and liabilities theoretically would allow more items to be recognized in the annual reports, but the updated criteria for recognition ensures that this is only the case, if the information can be considered useful to the users of the annual report. The result of my thesis shows that there is no short term effect on the information available to the users of the annual report, and that further in depth analyses regarding what items are useful, for the users of the annual report, to be included in the annual reports, needs to be conducted to make a better estimation of the long term effects.