6 A conceptual and regulatory framework Flashcards
What is the international financial reporting standards foundation responsible for?
Governance of the IFRS standard setting process
What is the international financial reporting standards board responsible for?
Responsible for setting IFRS standards
What is the IFRS interpretations committee responsible for?
Issue guidance where divergent interpretations have arisen
What does the IFRS advisory council do?
Forum for experts to offer advice to the board
Why is a framework needed?
To ensure the achievement of relevant and reliable financial reporting
Full regulation of financial statements preparations
What is principle based accounting?
Follows a conceptual framework
Accounting standards are created based on the conceptual framework
What is rules-based accounting?
Accounting standards are a set of rules to be followed
‘Cookbook’ approach
What is the standard setting process?
The board identifies a subject requiring a standard
The board establishes an advisory committee to recommend appropriate treatment
An exposure draft is issued
Having considered comments - publishes the standard
What are qualitative characteristics?
Are attributes that make information useful
What are the two types of qualitative characteristics?
Fundamental and enhancing
What are the two types of fundamental characteristics?
Relevance and faithful representation
What are the two types of relevance fundamental characteristics?
Predictive value
Confirmatory value
What are the three types of faithful representation for fundamental characteristics?
Complete
Neutral
Free from error
What are the four types of enhancing characteristics?
Comparability
Verifiability
Timeliness
Understandability
What is the definition of an asset?
A resource controlled by an entity as a result of past events which is expected to result in an inflow or economic benefit
