Sofea is a new accounting degree student. She has some questions regarding the Conceptual Framework. She knows that the Conceptual Framework sets forth the objective and fundamentals that will be the basis for developing financial accounting and reporting standards. Notwithstanding, Sofea wants to know more regarding the rationale for the adoption of The Conceptual Framework for Financial Reporting in Malaysia and the qualitative characteristics that underlie the preparation of general purpose financial reporting.

Required:

In relation to the above statement, and with reference to The Conceptual Framework for Financial Reporting (MASB, 2018), advise Sofea on the following issues:

a) Explain the rationale for having a conceptual framework?

(4 marks)

b) How does the Conceptual Framework differ from accounting standards?

(2 marks)

c) Explain how materiality is related to the proper presentation of financial statements? What factors should be considered in assessing the materiality of misstatement in the presentation of a financial statement?

(4 marks)

d) Outline the criteria that must be satisfied before a financial statement element can be recognized in the financial statements

(2 marks)