The Conceptual Framework for Financial Reporting (Conceptual Framework) describes the objective of, and the concepts for, general purpose financial reporting. The Conceptual Framework is, in other words, the starting point in the development of financial standards.
The purpose of the Conceptual Framework is to:
(a) assist the International Accounting Standards Board (Board) to develop IFRS Standards (Standards) that are based on consistent concepts;
(b) assist preparers to develop consistent accounting policies when no Standard applies to a particular transaction or other event, or when a Standard allows a choice of accounting policy, and
(c) assist all parties to understand and interpret the Standards.
Perhaps the most important point to consider is point b. The Conceptual Framework provides guidelines for the preparers of financial statements to develop reporting standards in areas where no standards have been developed. In other words, it allows for the exercise of professional judgment in the preparation of financial statements.
Additional information is provided here.