Applicable financial reporting framework
The applicable financial reporting framework is the framework adopted by management and, where appropriate, those charged with governance in preparing the financial statements, that is acceptable given the nature of the entity and the objective of the statements or required by law or regulation. The auditor considers its acceptability as a precondition for an audit and evaluates the statements against it.
Worked example
Management prepares general-purpose statements under the IFRS Accounting Standards applicable to the entity; the auditor evaluates whether that framework is appropriate and whether the statements comply.
Common mistake
Do not assume the same framework applies to every entity or treat the conceptual framework as a substitute for the applicable accounting standards.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Supporting | September 2026–June 2027 |