What is a Statement of Principles

An accounting standard-setter's conceptual framework or statement of principles describes the accounting model that it uses as the conceptual underpinning for its work. Such statements therefore typically describe the standard-setter's views on:

  • the activities that should be reported on in financial statements

  • the aspects of those activities that should be highlighted

  • the attributes that information needs to have if it is to be included in the financial statements

  • how information should be presented in those financial statements.

The Purpose of the Statement of Principles

The main role of the Statement is to provide conceptual input into the FRC's work on the development and review of accounting standards. The Statement is not, therefore, an accounting standard nor does it contain any requirements on how financial statements are to be prepared.