Definition and need of conceptual framework

Conceptual Framework

Definition and need of conceptual framework consists of two terms: Conceptual & framework. conceptual means “idea or plan”. On the other hand. “framework” means essential supporting structure or basic structure. For accounting information stands for the plan or ideas of basic structure of generating and presenting accounting information to a diversified group of users for decision making.

Academically, conceptual framework is a coherent (intelligent or consistent) system of interrelated objectives and fundamentals

I.  that can lead to consistent standards and

II. that prescribes the nature, function and limits of financial accounting and financial statements.

The conceptual framework is like a constitution, a democracy of accounting for the standard setting process.

Generally speaking, the rationale behind developing a framework is to widen the acceptability to users, to increase users’ understand-ability and to provide proper accounting treatment.

Two needs of developing such framework are as follows:

  1. Tow ensure worldwide acceptability of accounting and to enhance the users understanding of and confidence in financial reporting and
  2. New and practical problems relating to accounting in the complex business field can be solved with the help of such framework.

Definition and need of conceptual framework




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