Research Approach Conceptual Framework for Financial Reporting

Objectives: The objectives can be categorised as follows-

To describe the effectiveness of conceptual framework

To clearly understand the objective of financial reporting

To assess the qualitative characteristics of financial information

To identify the basic elements of financial statements

To analyse the impact of constraints have on reporting accounting information

Research Methodology

Research type: In carrying out conceptual framework, quantitative research type is taken for analysing research on the topic.

Sampling: Simple random sampling is used by taking sample of 20 personnels. This is helpful as taking data from entire population is practically not possible.

Data collection: In this aspect, primary and secondary data is gathered for effectively extracting results. Moreover, survey is also conducted to assess results.

Data Analysis: This is done by implementing descriptive analysis in order to take out research on conceptual framework for financial reporting.

Research Approach

The research approach used in this scenario is deductive approach for carrying out objectives of the research topic in effective manner.

Limitation of research

There are certain limitation of research such as sampling size might be small by which results obtained may not be reliable. Another limitation is implementation of data collection technique such as lack of having experience in collecting primary data. Moreover, literature review findings may not be properly extracted from the scope of works attained by previous scholars.

Discussion of concepts

As per the views of Warren and Jones (2018), conceptual framework for financial reporting is required so that information may be disclosed in financial statements of company and as such, stakeholders may be benefited by such information. This is essentially required to effectively maintain and classify data of financials in the respective heads. It means that expense and revenue must be disclosed in income statement whereas, liabilities and assets shall be classified in balance sheet of entity. This provides clarity to shareholders in assessing financial condition of the firm in effective way. It helps stakeholders to make better and enhanced decisions by seeking statements in the best possible manner. In relation to this, Hermann, DiStasio and Tkatchenko (2017) says that these statements such as balance sheet, income statement and cash flow statement and statement of changes in equity should be made in accordance to the framework provided by professional bodies. These are IFRS (International Financial Reporting Standards), IASB (International Accounting Standards Board), FASB (Financial Accounting Standards Board) to name a few. The above mentioned professional bodies provides legal and conceptual framework to effectively prepare financial statements with information disclosed in that manner which imparts clarity to the stakeholders in taking better decisions.

However, on contrary to this as per the views of Larkin, DiTommaso and Ruppel (2017), basic objective of financial reporting should be identified so that reliability can be addressed in a better way. The main objective is to impart necessary information to potential investors, lenders and creditor and other various stakeholders in order to give clarity about financial health of the business in the best possible manner. This is required so that they may be able to take effective decisions. The general purpose of preparation of financial statements is to provide stakeholders adequate and true information.

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