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Section 2 – Concepts and Pervasive Principles
Scope
Section 2 describes the objective of financial statements, which is to provide useful information about the entity’s financial position, performance and cash flows, and sets out the concepts and underlying principles of preparation. The purpose of Section 2 is to assist preparers in determining the accounting treatment in a transaction that is not covered by the specific standards.
Objective of financial statements
Extract from FRS102: Section 2.1A-2.3
2.1A Although this section sets out the concepts and pervasive principles underlying financial statements, in some circumstances there may be inconsistencies between the concepts and principles in this section of the FRS and the specific requirements of another section. In these circumstances the specific requirements of the other section within the FRS take precedence over this section
2.2 The objective of financial statements is to provide information about the financial position, performance and cash flows of an entity that is useful for economic decision-making by a broad range of users who are not in a position to demand reports tailored to meet their particular information needs.
2.3 Financial statements also show the results of the stewardship of management – the accountability of management for the resources entrusted to it.
OmniPro comment
The above guidance is much broader than that provided under old GAAP as there is no limit put on the broad range of users.
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