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'Developing a conceptual framework is an impossible possibility 'it is hard to say that this statement is wrong or not. First, there is no accurate or definitive view of what constitutes a conceptual framework, but there is no doubt that conceptual framework helping a development of academic theory, meanwhile, it is also provide a great deal of prescription. Developing a conceptual framework is feasible and promising. In this issue, I explain what is the conceptual framework? Who needs them? And list the importance of conceptual framework to financial report prove my view.
NEED FOR A CONCEPTUAL FRAMEWORK
Why do we need to develop a conceptual framework? Of course, it is be useful, the body of concepts should to make rules and relate to financial report; a soundly developed conceptual framework enables the IASB to issue more useful and consistent pronouncements over time. It means a coherent standard should result. So, if framework have no a soundly development, the guidance by it will influent standard-setting based on individual concepts.
In other words, standard-setting cannot base on personal conceptual frameworks; it will lead to wrong conclusions about identical or similar issues than it did previously. As a result, past decisions is not treat as future ones, standards cannot be consistent with one another. Furthermore, the conceptual framework should be paying attention to users' understanding about financial reporting. On the other hand, the development of conceptual framework should solve new or emerging problems quickly.
Development of a conceptual framework
Conceptual framework has a different definition for IASB and FASB, IASB's conceptual framework usually is described in the document, FASB' conceptual framework is a series of concept statements. Both of them are working to develop an improved future common conceptual framework and provide a sound foundation for developing future accounting standards.
Overview of the conceptual framework
Conceptual framework is providing important information for financial report; the information can be divided into three levels.
The first level is the objective of financial reporting, what the purpose of financial reporting.
The second level is qualitative characteristics that research the importance of accounting information and the elements of financial statements. (Relevance and faithful representation)
The third level identifies recognition measurement and disclosure. (Relate to assumptions, principles and constraints)
However, Nye and Berardo (1966) also discuss some advantages of conceptual frameworks, first, the development of a conceptual framework need to provide adequate definitions of concepts and measurement; second, conceptual frameworks facilitate the researcher classify the ideas, third, it is important that not only are the substantive results of research understood, but also that the essential concepts by user who using the results. Fourth, good development of a conceptual framework can enhance communication between academics, who speak different languages and avoid reader have a implicit assumption and concepts unconsciously. Lastly, the conceptual framework allows the clarification of assumptions, frames of reference.
Meanwhile, Miller and Redding (1986) also discussed financial accounting standards board's (FASB) conceptual framework, they consider that there are two ways about developing the conceptual framework. First, its development facilitates the education of those unfamiliar, like some unclear academic or difficult theory. Secondly, the description of existing practice allows the formal statement of general rules, it means allowing the development of new, consistent rules for new situations, the investigation of conceptual framework would begin by current practice so that consider a higher level of abstraction. The other reason for creating a conceptual framework is to provide prescriptions of future practice, like how to resolve unsettled questions. Miller consider a good framework is useful to guide a standard setting body, the process will become efficient, like the users who keep different flied be able to communicate with others, on the same basis of understanding, Miller and Redding (1986) gave their idea that developing conceptual framework is important.
In summary, the conceptual framework was encouraged by a sensible and clear discussion in a particular situation; it is also benefits to the body of knowledge in the discipline.
Because of above-mentioned views of authors, I am listing my opinions. first, conceptual framework act as a teacher and be used for pedagogic purpose to introduce a discipline is a good beginning, the users is easier to use bibliography which flows from the literature review and making a further investigation, framework like a tool helping the understanding of the subject, the development of model allow the reader to better grasp the information which they want to know. A second benefit of developing the conceptual framework is that it leads to the identification of inadequacies in current situation, the use of a conceptual framework allow the reader resolve these problems, it is also allowing for enhance exercise and avoid risk. The fourth benefit is that the conceptual framework promote more debate to take place, the model development leads to more academic debate, through the debate, the problems can be solved effectively.
The development of conceptual framework related to relevant theory, in some cases, it lead to the development of a theory and a model, like using a diagram to explain relationships between variables, this is a basis of the conceptual framework, in this aspect, the useful theory was accepted by the reader, meanwhile, it tend to represent the views of author base on some relevant literature, this is also the reason of more extensive literature review, the review leads to model development which can be positive or normative, the more mature to a discipline.
At the beginning of the conceptual framework, it was used for classifying terms, the aim of developing a common terminology in some areas (Rothschild's 1981). With the development of academic knowledge, this represents a personal conceptual framework, based on the author's idea on the subject. Before long, a common language, a system of classification and the fundamental beginnings of a theory are developed, the more experience would gained by learning based on conceptual framework, like the research of reality and discussion of the literature, conceptual framework has a fast development.
Next, I will discuss some problem about the conceptual framework to accounting standards.
The users are worrying some possible problem about the development of a conceptual framework. I think there are several points about the problems. First, accounting standard should be more consistent and logical, because of the accounting standard was developed from an older concepts, it should based on the basis of agreed principles, as the FASB and IASB (Bullen and Crook, 2005, p.1) state 'to be principles-based. Standards cannot be a collection of conventions but rather, must be rooted in the fundamental concepts. If the accounting standard is discriminating in the aspect of theory or framework will lead to a difficult definition about the academic knowledge. Secondly, the standard-setters are responsible for their decisions; the responsibility must be enhanced, the thinking behind specific requirements should be more explicit, they also should give a detail explanation about their thinking and allow to feedback from the reader. The third is about communication, the standard-setters should be enhanced review of users, and the standards should be more apparent, the users will have a better understanding of why they are reporting. Sometimes, having a conceptual framework maybe alleviate some of political pressure when accounting standards are developed, in a sense, framework can provide a defenses against political attack. The fourth,