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CIMA - F1 > 1. The Regulatory Framework > Flashcards

1. The Regulatory Framework Flashcards

1
Q

What is the aim of accounting regulation?

A

To ensure the financial statements give a fair presentation of financial performance and financial position

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2
Q

What does accounting regulation ensure? (3)

A
  1. Preparers have guidance on how to provide information that is relevant to users
  2. Financial information is consistent
  3. Users can rely on the information
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3
Q

What are the 5 sources of accounting regulation?

A
  1. Local corporate and taxation law (code or common)
  2. International Financial Reporting Standards (IFRSs)
  3. National Accounting Standards (FRC in UK)
  4. Stock Exchange Regulations
  5. Regulation from other bodies (e.g. EU)
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4
Q

What is the difference between code and common law?

A

Code is based on legislation and detailed rules, common law is based on case law

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5
Q

What is the code law applying to all companies in the UK?

A

The UK Companies Act 2006

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6
Q

What are the objectives of the IFRS foundation?

A
  • To develop a single set of high quality IFRSs through the IASB
  • To bring about convergence of national and international sandards
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7
Q

What are the tasks of the IFRS foundation?

A
  • To monitor and fund the IASB, IFRS AC and IFRS IC
  • To appoint members of the IASB, IFRS AC and IFRS IC
  • To establish and amend procedures of the IASB, IFRS AC and IFRS IC
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8
Q

What is the objective of the International Accounting Standards Board? (IASB)

A

To develop and publicise the IFRSs, to approve IC interpretations

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9
Q

What are the tasks of the IFRS interpretations committee?

A
  • To provide timely guidance on the application and interpretation of IFRSs
  • To provide guidance on new financial reporting issues not addressed in IFRSs
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10
Q

What is the IFRC advisory council?

A

The formal advisory body to the IASB and IFRS Foundation, taking recommendations and providing advise to the IASB on priority areas of accounting

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11
Q

What is the International Organisation of Securities Commissions? (IOSCO)

A

The worldwide association of national securities regulatory committees, including the FCA in the UK and the SEC in the US.

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12
Q

What are the objectives of the IOSCO?

A
  • To promote high standards of regulation
  • To act as a means for regulators in individual countries to communicate with each other
  • To provide input into the development of IFRSs
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13
Q

What is the International Integrated Reporting Council? (IIRC)

A

A global coalition of regulators, investors, companies, standard setters, accountants and non governmental organisations aiming to address the limitations of traditional financial statements

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14
Q

What is the IIRC International Integrated Reporting Framework?

A

A report explaining the principles and concepts which should be followed in preparing an integrated report and what elements should be included

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15
Q

Is preparation of an Integrated Report mandatory?

A

No

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16
Q

What does an integrated report refer to an organisation’s resources as?

A

Financial capital, manufactured capital, intellectual capital, human, social, relationship and nature capital

17
Q

What are the 5 steps in the process of publicising or revising an IFRS?

A
  1. Establish an advisory committee
  2. Issues of Discussion paper
  3. Issue of Exposure Draft
  4. Amendment of Exposure Draft
  5. Issue of IFRS
18
Q

Does the IASB have legal authority?

A

No

19
Q

What are the advantages of increased international harmonisation in national accounting regulation? (5)

A
  1. Better quality
  2. Greater comparability
  3. Easier to comply with other regs
  4. Overseas consolidation easier
  5. Reduced audit fees for international companies
20
Q

What are the disadvantages of increased international harmonisation in national accounting regulation? (5)

A
  1. IFRS too onerous and complex for small companies
  2. Primary users are investors/lenders, but in some countries may be tax authorities
  3. Language and cultural barriers
  4. Different legal systems
  5. Nationalism
21
Q

What are the advantages of a principles based approach over a rules based one? (4)

A
  1. More difficult to find loopholes
  2. Rules less likely to go out of date
  3. Difficult to make rules cover every transaction
  4. Can resolve issues for which there is no specific treatment
22
Q

Is the CIMA Code of Ethics rules or principles based?

A

Principles, framework based

23
Q

What are the fundamental principles of the CIMA Code of Ethics?

A 
Confidentiality
Integrity
Professional behaviour
Objectivity
Professional competence and due care
24
Q

What are the 5 categories of threat which could compromise or be perceived to compromise a professional accountants compliance with the Fundamental principles?

A
  1. Self Interest Threat
  2. Self review threat
  3. Advocacy threat
  4. Familiarity threat
  5. Intimidation threat
25
Q

What are safeguards?

A

Actions or measures that may eliminate threats or reduce them to an acceptable level

26
Q

What are the 4 steps to resolution of ethical conflict?

A
  1. Gather all relevant information
  2. Raise the concern internally
  3. Report the concern externally
  4. Remove themselves from the situation/resign

CIMA - F1 (15 decks)

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