Question

a) What are the needs of the stakeholder groups identified in the International (IASB) Conceptual Framework? b) Does the Framework address the needs of all stakeholder groups or a few influential ones? c) Can Public Interest Theory or Private Interest Theory explain the regulation of accounting using International Financial Reporting Standards (IFRS)? d) Give reasons why IFRS might not be the best approach for domestic use by reporting entities in all countries.

Answer 1

Part A

To provide financial information that is useful to users in making decisions relating to providing resources to the entity. Users’ decisions involve decisions about buying, selling or holding equity or debt instruments; providing or settling loans and other forms of credit; voting, or otherwise influencing management’s actions

Part B

It aims to  address the needs of all stakeholder groups

Part C

Yes Public interest theory can explain the regulation of accounting using International Financial Reporting Standards (IFRS)

Part D

The reason lies in the simple fact that each countries economic conditions are different and major users of the financial statements are different. Converging to IFRS may not be suitable for them as it would mean generation of information not muc useful for them or contradicting their laws of taxation or company law.