1. Financial Reporting Framework

Question 1

The Financial Reporting Framework

Answer 1

Regulatory Framework

Conceptual Framework

Revenue recognition.

Question 2

What are the elements of the Regulatory Frame work?

Answer 2

International Accounting Standards

European Union

Stock Exchange Rules

Other

Question 3

International Accounting Standards

Answer 3

International Accounting Standards Board (IASB)

Standing Interpretations Committee (SIC)

Standards Advisory Council (SAC).

Question 4

European Union

Answer 4

Listed companies in the European Union have complied with IAS since 2005.

Question 5

Stock Exchange Rules

Answer 5

National listing rules to be complied with by all listed companies.

Question 6

Other

Answer 6

National Law take precedence over IFRS/IAS

The OECD undertakes it’s own research into accounting standards via ad hoc workings groups, issuing guidelines for members.

Question 7

What is the IASB Conceptual Framework?

Answer 7

A Statement of generally accepted theoretical principles which form the frame of reference for financial reporting.

Question 8

Summary of the Conceptual Framework

Answer 8

A joint IASB/FASB project being produced in phases

Advantages and Disadvantages

Chapter 1. The Objective of General Purpose Financial Reporting

Chapter 2. The Reporting Entity (Incomplete)

Chapter 3. Qualitative Characteristics of Useful Financial Information

Chapter 4. Remaining Text of the 1989 Framework

Question 9

Advantages and Disadvantages

Answer 9

Advantages

Avoids ‘patchwork’ or firefighting approach

Less open to criticism of political/external pressure

Some standards may concentrate on the Income Statement, some on the SOFP

Disadvantages

Variety of users - single framework may not suit them all

May need different standards for different purposes

Preparing and implementing standards is still difficult even with a framework

Question 10

Chapter 1. The Objective of General Purpose Financial Reporting