Conceptual Framework

Front 1

Securities Act of 1933

Back 1

regulates IPOs

Front 2

Securities Act of 1934

Back 2

regulates secondary markets

-created SEC

Front 3

does the SEC have authority to establish standards?

Back 3

yes, but they usually defer this to FASB

Front 4

3 SEC steps in creating Financial Reporting Releases

Back 4

1. conceptual release

2. rule proposal

3. rule adoption

-approved by full commission

Front 5

what is the most authoritative of all pronouncements?

Back 5

Accounting Standards Codification

Front 6

FASB steps in creating a new standard

Back 6

1. identifies issues based on stakeholder comment

2. decide whether or not to add to agenda

3. deliberate with public

4. exposure draft for public input

4. issue Accounting Standards Update (with majority vote)

Front 7

main difference between FASB and IFRS

Back 7

GAAP is rules-based

IFRS is principles-based

Front 8

where are all GASB standards found?

Back 8

Codification of Governmental Accounting and Financial Reporting Standards

Front 9

3 main level of Conceptual Framework for FS

Back 9

1. Objective of the framework

2. Qualitative characteristics & Elements

3. Assumptions, Principles, & Constraints

Front 10

Objective of Conceptual Framework FS:

Back 10

to provide information that is useful to present and potential equity investors, lenders and creditors in their capacity as capital providers

Front 11

2 types of Qualitative Characteristics

Back 11

1. Fundamental

2. Enhancing

Front 12

2 Fundamental Qualitative Characteristics

Back 12

1. Relevance: being helpful to investors

2. Faithful Representation: what's shown is true

Front 13

3 things that make info Relevant

Back 13

1. predictive value

2. confirmatory value

3. materiality

Front 14

3 things that make info Faithfully Represented

Back 14

1. completeness

2. neutrality

3. free from error

Front 15

4 Enhancing Qualitative Characteristics

Back 15

1. comparability

2. verifiability

3. timeliness

4. understandability

Front 16

4 Assumptions of Conceptual Framework

Back 16

1. economic entity: business is separate from owner's activities

2. going concern

3. monetary unit

4. periodicity

Front 17

4 Principles of Conceptual Framework

Back 17

1. measurement: historical cost or FV principle

2. revenue recognition: when realized and earned

3. expense recognition: expense follows revenue

4. full disclosure

Front 18

2 Constraints of Conceptual Framework

Back 18

1. cost constraints

2. industry practices