1.1 Regulatory framework - introduction

Question 1

What is the main objective of financial reporting?

Answer 1

To provide
- useful information
- about the reporting entity
- to shareholders & other users of FSs
- who use the information to make financial decisions.

Question 2

What does IFRS stand for?

Answer 2

International Financial Reporting Standards

Question 3

What is IFRS?

Answer 3

1. IFRS is the universal business language followed by companies across the globe.
2. It is a set of accounting standards developed & issued by the IASB.

Question 4

What does UK GAAP stand for & what do they do?

Answer 4

1. The UK Generally Accepted Accounting Principles
2. Rules & regulations influenced by local issues that have given rise to particular accounting procedures

Question 5

Which body issues the International Financial Reporting Standards (IFRS)?

Answer 5

The International Accounting Standards Board (IASB)

Question 6

Why are accounting standards often more effective than laws?

Answer 6

Laws are slow to change, whereas accounting standards can respond effectively to major incidents (e.g. Carillion)