Conceptual framework helps to identify the qualitative characteristics of the accounting information provided by the firm. It helps to understand how the financial reporting of the firm would shape and the information which is required to be published by the firms. This framework will analyze the type of the firms and different financial statements which they need to publish. All firms may not be require to publish all the information. Depending on the nature of the business and they type of firm, certain information becomes more relevant.
Also the quality of the information is also important while publishing the results. The framework defines that the firm should fairly present the statements, should use going concern, should use accrual basis of accounting and also defines the frequency of reporting. This framework helps to keep the consistency in the statements for the firm and make them comparable (Carlin & Finch, 2010).
This part will cover the guidelines given in the New Zealand accounting standards for different financial statements. The main purpose of the financial statements as mentioned in the accounting standard prescriptions is to present in a structured manner the position as well as the performance of the financial aspects of the firm. These aspects help to make economic decisions for various stakeholders of the firm like investors, debtors, creditors, suppliers. The financial statements provide information about the assets, liabilities equity, income and expenses, contribution by the owner and lastly the cash flows of the firm. These financial statements should present the financial position of the firm with fairness. All the transactions, events in addition to the conditions should be faithfully represented by the firm. All these statements should be formed in accordance with the New Zealand framework. All these financial statements should be formed according the principle of going concern. In addition to this the firm should use the accrual basis of accounting (Stent, Bradbury & Hooks, 2010).
Balance sheet also referred to as financial positions statement should give information about the amounts of cash and its equivalents, trade receivables as well as other receivables, inventories, biological assets, financial assets, investments related equity method, intangible assets, property plant and equipment, trade payables, provisions, financial liabilities, non controlling interest, deferred tax assets and liabilities. Current and noncurrent item should be separated and classified separately. These items should satisfy the criteria laid by the NZ guidelines. In addition to this the other items should also follow the guidelines and there should be proper disclosures for the items which have been mentioned in the framework.