Challenges to the Users of Financial Reports Constructed Using Multiple Measurement Bases: A Review of the IASB’s Conceptual Framework for Financial Reporting

Abstract

The IASB’s conceptual framework for financial reporting identifies multiple measurement bases and concludes that an entity may employ more than one measurement base in constructing the financial reports. The framework further clarify situations as to how the preparers will proceed in constructing the entity’s financial report where the preparers are satisfied that a piece of information is relevant to the users of financial reports, but is subject to a high degree of measurement uncertainty. The purpose of this paper is to critically evaluate the choice of multiple measurement bases in the conceptual framework and highlight the challenges posed to a user of financial reports who seeks to obtain insights into an entity’s financial performance and position through reading reports constructed using an eclectic approach to measurement.