(74)-STATEMENTS OF PRINCIPLES IN ACCOUNTING

Statements of Principles in Accounting

The Accounting Standards Board (ASB) published as exposure draft of its statement of principles for financial reporting. The statement consists of eight chapters.

1. The objective of financial statements
2. The reporting entity
3. The qualitative characteristics of financial information
4. The elements of financial statements
5. Recognition in financial statements
6. Measurement in financial statements
7. Presentation of financial information
8. Accounting for interest in other entities

Purpose of the statement of principles

The following are the main reasons why the Accounting Standards Board (ASB) developed the statement of principles.

• To assist the Accounting Standards Board (ASB) by providing a basis for reducing the number of alternative accounting treatments permitted by accounting standards and company law
• To provide a framework for the future development of accounting standards
• To assist auditors in forming an opinion as to whether financial statements conform with accounting standards
• To assist users of accounts in interpreting the information contained in them
• To provide guidance in applying accounting standards
• To give guidance on areas which are not yet covered by accounting standards
• To inform interest parties of the approach taken by the Accounting Standards Board (ASB) in formulating accounting standards

The role of the statement can thus be summed up as being to provide consistency, clarity and information.