Question 1: 2
Conflicts in Accounting Concepts and Conventions 2
Advantages & Disadvantages of a Conceptual Framework 5
Usefulness of Financial Statements to Investors 6
Question 2: 7
Pros and Cons of Budgets and Budgetary Control 7
Beyond Budgeting 9
Discuss the strengths and weaknesses of the accounting concepts and conventions and of the regulatory framework (SSAPs and FRSs) that govern published financial statements. Do the criticism of the concepts and the regulatory framework mean that published financial statements do not provide investors with useful information?
The goal of financial reporting is to provide financial information that can be used for making economic, political, and social decisions and demonstrating accountability and stewardship. There are however many different users of financial reports and their needs may conflict or change over time. In order for any comparison to be made between companies' accounts, there must be a common set of conventions or standards.
Standards can be regarded as the generally accepted language of accounting. Limited companies are required by law (CA 1985) to prepare and publish accounts annually. From 1970 to 1990, the Accounting Standards Committee (ASC) published 25 statements of standards accounting practice (SSAP's). These were felt to be too narrow and authoritative. The Accounting Standards Board (ASB) became the standards setting body and issued Financial Reporting Standards (FRS's). These are more broadly based and have replaced SSAP's. The framework establishes the underlying accounting concepts and conventions that would govern how all formal accounting statements should be created, preserved and presented
The Council on Corporate Disclosure and Governance (CCDG) will prescribe accounting standards in Singapore. Under a new arrangement, the Institute of Certified Public Accountants of Singapore (ICPAS) will continue to play a pivotal role in working with the CCDG in the...