Introduction
The development of conceptual frameworks (CFs) since the early twentieth century has occurred in the context of a discipline self-conscious of its history as an applied technology (Hendrickson, 1982). It is envisaged that the IPSASB Framework will identify factors that should be considered in choosing the measurement basis to be required for particular assets and liabilities in specific circumstances. It is not expected that the IPSASB Framework will identify a single measurement basis that is appropriate in all circumstances. Such a single approach might be thought to be ideal, as the relationship between various amounts reported in the financial statements would be clear: in particular, the amounts of different assets and liabilities could be added to provide meaningful totals. However, there is no single measurement basis that is appropriate in all circumstances. For example, in financial statements prepared on a historical cost basis, it necessary to write down surplus or obsolete assets to net selling price; if financial statements are prepared on a market value basis, substitutes will be required for those assets and liabilities for which market values are unavailable. It is also necessary to select different measurement bases in different
Phase 3
Financial statements are prepared according to agree upon guidelines. In order to understand these guidelines, it helps to understand the objectives of financial reporting. The objectives of financial reporting, as discussed in the Financial Accounting standards Board (FASB) Statement of Financial Accounting Concepts No. 1, are to provide information that is useful to existing and potential investors and creditors and other users in making rational investment, credit, and similar decisions; helps existing and potential investors and creditors and other user to assess the amounts, timing, and uncertainty of prospective net cash inflows to the enterprise; identifies the economic resources of an enterprise, the claims to those resources, and the effects that transactions, events, and circumstances have on those resources. The existing Conceptual Framework does not have a section on presentation and disclosure, resulting, in the views of some, in disclosure requirements that are not always focused on the right/relevant disclosures and are too voluminous. The staff’s draft DP proposed that the objective of primary financial statements is to depict an entity’s financial position, financial performance and cash flows in a summary that is useful to a wide range of users for their assessment of the amount, timing and uncertainty of the entity’s future net cash inflows, and how efficiently and effectively the entity’s management and governing board have discharged their responsibilities to use the entity’s resources. Following from this primary purpose, the staff considered the conceptual principles underpinning:
Classification and aggregation; Offsetting; Cohesiveness; Scope of information that should be included in the notes to the financial statements (i.e., disclosure).
Board members outlined many views on the staff’s proposed objective of primary financial statements. In particular, the IASB Chair believed the primary objective related to how efficiently and effectively the entity’s management and governing board have discharged their responsibilities to use the entity’s resources – an objective he viewed as synonymous with a stewardship role – as opposed to providing information to users to assess the amount, timing and uncertainty of an entity’s future net cash inflows. Several others, building on this view, noted that the revised Conceptual Framework should make clear that the objective of the primary financial statements should not be to allow users to forecast cash flows.

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