1.

3 A conceptual framework, such as the International Accounting Standards Board (IASB) Framework,
provides some fundamental assumptions about the role of general purpose financial reporting and the
attributes that financial information should possess for it to be useful in assisting the resource allocation
decisions of financial statement readers. As indicated in this chapter, the United States Financial
Accounting Standards Board (FASB) defined a conceptual framework as a coherent system of
interrelated objectives and fundamentals that can lead to consistent standards.
Since conceptual frameworks provide perspectives about such issues as: the qualitative characteristics
that financial information should posses; the identification of the types of entities that should produce
general purpose financial reports; the way in which the elements of financial accounting should be defined
and recognised, and so forth (note the emphasis on should), the conceptual frameworksin providing
prescriptionare considered to be normative in nature. Positive research, on the other hand, might
simply attempt to describe or predict the behaviour of those people in charge of producing general
purpose financial reports, or the behaviour of financial report readers.