What is a Conceptual Framework?

A conceptual framework establishes the fundamental principles that underpin how financial reports are prepared and presented in the public sector.

Think of it as a blueprint: Just as architects use blueprints to ensure buildings are structurally sound and serve their purpose, standard-setters use the conceptual framework to ensure accounting standards are consistent and logically derived from agreed principles.

The International Public Sector Accounting Standards Board (IPSASB) issued the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities to provide global best practices. Kenya’s Public Sector Accounting Standards Board (PSASB) aligns with these concepts as it adopts IPSAS, demonstrating Kenya’s commitment to transparency and accountability in line with international standards.

This chapter examines four critical elements of the conceptual framework that every public sector accountant in Kenya should understand:

• The role and authority of the framework
• The objectives of financial reporting and its users
• The qualitative characteristics of useful information
• The definition of a reporting entity