Question

If you were to develop an accounting conceptual framework from scratch, where would you start and how would you structure it?

Answer 1

If I were to develop an accounting conceptual framework from scratch then I will start by looking at the fundamental principles that has to be looked into. This is because the purpose of developing an accounting conceptual framework is to provide a framework for setting accounting standards, a basis for resolving accounting disputes, fundamental principles which then do not have to be repeated in accounting standards. Thus I will start by looking at the fundamental principles that has to be looked into and also by looking at the key accounting disputes. I will determine the underlying reasons for these disputes and then look at how the accounting conceptual framework being developed by me will help solve these disputes in a systematic manner and structured manner.

I will structure the accounting conceptual framework that I am developing in a manner that will serve as a guideline for setting accounting standards for all types of entities be it for profit entities or not for profit entities. The flow of ideas and objectives will be coherent and flowing in a logical manner and this will lead to creation of a consistent set of rules and standards. In other words the structure of the accounting conceptual framework will be so that it will ensure that consistent set of rules and standards come into existence and can be referred to easily for the purpose of applying in real world accounting related cases.