Prospects for Developing the Common Conceptual Framework for Financial Accounting and Financial Reporting Quality Challenges in the Digital Transformation

Prospects for Developing the Common Conceptual Framework

Abstract

This research aimed to explore the prospects for developing the common conceptual framework (IASB & FASB) and address the challenges of financial reporting quality in light of digital transformation. The research problem is crystallized in the “conceptual confusion” resulting from the gap between the newly introduced qualitative characteristics — foremost among them honest representation — and the requirements of professional practice facing the risks of managerial bias and creative accounting. The research adopted the systematic critical review methodology by applying the PRISMA protocol to analyze twenty reference studies and official documents. The content analysis method was used through conceptual and contextual analysis units, with the adoption of thematic coding to deconstruct the philosophical and technical dimensions of the framework.

The research concluded that replacing "reliability" with "true representation" weakened the ability to verify actual value, thus facilitating the adoption of biased management estimates through the expansion of fair value. The findings also revealed a structural deficiency in the existing definitions of "digital assets" and big data, exacerbating the problem of information asymmetry.

The research also recommended reformulating the framework to incorporate "comprehensive accountability" and reinstating the principle of "accounting prudence." Furthermore, it proposed an improved model for defining financial statement elements that ensures the representation of economic substance over legal form in the digital age.