Intermediate Accounting Exam 598 Part 22. A critical component of any accounting theory course is understanding the conceptual framework.2a. The conceptual framework identifies the primary users of accounting information such as investors, creditors and those who advise them. It also presupposes a "prudent" investor; that is, an investor who takes the time to become reasonably well informed about accounting theory and practice. Discuss this concept in relation to the current economic environment. Are different investor groups “prudent?” According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The main users are investors, creditors and those who advise them. It goes on to define the criteria that make up each potential user, as well as the limits of financial reporting. The FASB explicitly states that financial reporting is “only a source of information needed by those making investment, credit, and similar resource allocation decisions. Users should also consider relevant information from other sources and be aware of the characteristics and limitations of the information they contain” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine who the financial data should be addressed to and what level of prudence is necessary for a quality judgment. One of the most debatable topics in accounting today is the extent to which we should take stock of the situation. financial statements understandable to the general population. The FASB currently steers its reporting standards toward… middle of paper… and for the FASB to maintain a careful balance between cost and effectiveness. As Wolk carefully pointed out, “the FASB's primary objective is to provide useful information to external users subject to the benefit>cost constraint. Neutrality means being concerned primarily with the utility of the decision rather than with distributional effects” (Wolk, Dodd, & Tearney, 2003). It is for all these reasons that I believe that the identification of primary users does not affect the concept of neutrality. Neutrality is completely independent of who the users are. References Financial Accounting Standards Board. (2006, July 6). Conceptual framework for financial reporting. Financial Accounting Series, 1-55. Wolk, H., Dodd, J., & Tearney, M. (2003). Accounting Theory: Conceptual Issues in a Political and Economic Environment (6th ed.). Southwestern University Pub.