Research On Conceptual Framework For Financial Accounting Based On Fair Value

Since October2004, the International Accounting Standards Board (IASB) andthe US Financial Accounting Standards Board (FASB), has been busy for their jointproject to develop an improved conceptual framework for financial accounting basedon fair value which has been and will continue to have yielded substantialachievements. And the fair value has long been recognized as greatest progress inChinese enterprise accounting standard2006. According to the roadmap for Chineseenterprise accounting standard with an ongoing comprehensive convergence ofinternational accounting standards which is issued by the minist ry of finance in ourcountry in April2010, our country is also constructing a framework for financialreporting concepts based on fair value. It will be published soon.This paper systematically expounds the latest research achievements that FASBand IASB have gained for the Joint Conceptual Framework Project and predicts itsfuture development. This is one of the innovations. The author predicts that: Theconnotation of accounting elements will continue to be the economic benefits in thefuture; The element of cash flow should be added to the accounting elements; Thebasis of accounting recognition will be cash flow system; Fair value measurementshould be fully adopted; Financial statements should include economic incomestatement and so on. On this basis, this paper summarizes the researches on Chineseconceptual framework and fair value and relations between them, analyzingdifferences between Chinese conceptual framework and the Joint Project of FASB andIASB. The second innovation of this paper is to propose concrete ideas of theconstruction of Chinese conceptual framework based on fair value from angles ofrelatively ideal level and practical level, in the aspects of objectives, qualitativecharacteristics, elements and recognition, measurement, repor ting entity, presentationand disclosure and so on. The author holds that: The relatively ideal means Chineseconceptual framework can maintain international convergence; The practical levelshould pay attention to keep our own characteristic on the basis of borrowing ideasfrom the Joint Project.This paper contributes to the establishment and perfection of the frameworkbased on the concept of fair value. It also contributes to improve the quality ofaccounting information and promote our country with an ongoing comprehensiveconvergence of international accounting standards.