Just as an introduction some language thoughts to better understand what we are talking about.
Conceptual: consisting of concepts Conceptual Framework for Financial Reporting
Concept: an abstract or generic idea generalized from particular instances Conceptual Framework for Financial Reporting
Framework: a basic conceptual structure (as of ideas) Conceptual Framework for Financial Reporting
So that is a lot of concepts!
It shows implicit that it is about ideas, thoughts and/or notions. It is likely to suggest the result of reflecting, reasoning or meditating rather than of imagining. So it is the result of a due care thought process to enhance the understanding of Financial Statements and the IFRS standards defined to contribute to transparency, strengthen accountability and contribute to economic efficiency.
Transparency – enhancing the comparability and quality of financial information, enabling investors and other market participants to make informed economic decisions.
Strengthen accountability – reducing the information gap between the providers of capital and the people to whom they have entrusted their money. Standards and Accounting Guidelines based on the Conceptual Framework provide information needed to hold management to account. As a source of comparable information, those Standards and Accounting Guidelines are also of vital importance to regulators.
Contribute to economic efficiency – helping investors to identify opportunities and risks, thus improving capital allocation. For businesses, the use of a single, trusted accounting language derived from Standards and Accounting Guidelines based on the Conceptual Framework lowers the cost of capital and reduces reporting costs.
The Framework’s purpose is to assist the IASB in developing and revising IFRSs that are based on consistent concepts, to help preparers to develop consistent accounting policies for areas that are not covered by a standard or where there is choice of accounting policy, and to assist all parties to understand and interpret IFRS.
In the absence of a Standard or an Interpretation that specifically applies to a transaction, management must use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgement, IAS 8 11(b) requires management to consider the definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework.