The History Of Conceptual Framework Accounting Essay


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 will explain what is the conceptual framework? Why do we need to develop a conceptual framework? Introduce some information about its history and discuss the disadvantage or advantage of developing a conceptual framework. After, list some possible problems about framework.

What is the conceptual framework?

There is no definitive opinions of what is the conceptual framework, the FASB in the United defined it as 'a coherent system of interrelated objectives and fundamentals that is expected to lead to consistent standards' (Objectives of Financial Reporting by Business Enterprises, 1978) I think a conceptual framework is used in research to outline possible of action and analyses the advantage or disadvantage to present a preferred approach to an thought or idea. For example, the CEO can analyze the current market environment to judge what the global target that company need to developed. Meanwhile, conceptual framework are a type of intermediate theory, it can connect to all aspects of inquiry. For example, the problem definition, purpose of report, literature review, dates collection. Conceptual framework is different to empirical inquiry that depending upon research question or problem. On the other hand, I consider framework have also been used to explain conflict theory, within these conflict frameworks, visible and invisible variables function can be clear by concepts of relevance.

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The different definition of IASB and FASB

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.

Why do we need to develop a conceptual framework?

The FASB is the most direct beneficiary of the framework. The framework provides two aspects of benefits to the Board; one is a foundation for setting standards, another is concepts to use as tools for resolving accounting and reporting questions (

In my views, the framework contributes to greater efficiency in the standard-setting process, it means avoid some debate about fundamental issues, like 'what is a liability?' in the aspect of academic field, the framework is used to guide the development of accounting standards, it can facilitate the provision of fair or neutral information, the fair and neutral information enables users to make correct decision. Consequently, developing the framework is helpful to promote the efficient allocation of resources, like, the accounting theory knowledge can be reasonable used by accountant. On the one hand, 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, like some change of market or report, the framework should pay attention to update uninterruptedly.

The history of conceptual framework

Plato's conceptual framework is the beginning of current framework. A long time ago, objects in nature were unstable, they always changed, but the 'knowledge' must never change, it leads to the form of theory and it is also the most famous conceptual frameworks in history. (

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Now, for many years development of accounting standards, the conceptual framework was applied by many countries. For example, the United Kingdom's Accounting Standards Board initiated a conceptual framework development project in 1991. But, the recommendations related to accounting had been released in the United Kingdom in the 1940s.

At the beginning of the conceptual framework, it was used for classifying terms, the aim of developing a common terminology in some areas. 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.

The advantage or disadvantage of developing a conceptual framework

Najam 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. ("NGO Accountability: A conceptual framework", Development Policy Review, PP.339-353)

Meanwhile, Nordstrom (the author) 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, Nordstrom gave their idea that developing conceptual framework is important.(The Field Course in Geography: A Conceptual Framework, PP. 267-272)

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.

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. For example, student is easier to understanding the accounting subject; grasp the main point of theory knowledge by using the conceptual framework.

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.

For the disadvantages, the conceptual framework is not used for single users; maybe someone thought framework is not suitable for him. In addition, in some developing countries, the financial system or community system is not sturdy. The fast development of conceptual framework is not suitable for them. Meanwhile, the conceptual framework will lead to the financial information tend to complexity and many users is difficult to apply it, (

What the main problems about the conceptual framework to accounting standards?

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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.


In this essay, I state the definition of conceptual framework of mine, it is used for analyses the advantage or disadvantage to present a preferred approach to a thought or idea, conceptual framework is also a type of intermediate theory to connect to all aspects of inquiry.

Then, give some background information about the history of conceptual framework. Finally, I discuss the advantage or disadvantage of developing a conceptual framework, present my views: 1. conceptual framework act as a teacher and be used for pedagogic purpose to introduce a discipline. 2. The development of model allows the reader to better grasp the information which they want to know. 3. It leads to the identification of inadequacies in current situation. 4. Promote more debate to take place.

After then, I give some suggestions about developing the conceptual framework to accounting standards. 1. Accounting standard should be more consistent and logical. 2. The standard-setters are responsible for their decisions. 3. The standard-setters should be enhanced review of users.