Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Financial Reporting (FR) > A conceptual and regulatory framework > Flashcards

A conceptual and regulatory framework Flashcards

1
Q

What are the influences affecting IFRS Standards?

A
  • national company law
  • EU directives
  • security exchange rules
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the aim of regulation of accounting information?

A
  • is aimed at ensuring that users of financial statements receive a minimum amount of information that will enable them to make meaningful decisions regarding their interest in a reporting entity
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Advantages of harmonisation:

A
  • multinational entities: greater efficiency,a ccess to information
  • investors: better comparison
  • tax authorities: easier to calculate
  • large international accounting firms
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Disadvantages of harmonisation:

A
  • difficult to introduce, apply and maintain
  • different legal systems
  • different purposes of financial reporting between countries
  • countries may be unwilling to accept another country’s standards
    -costly to develop a fully detailed set of accounting standards
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is the IFRS Foundation ?

A

-International Financial Reporting Standards
- is the supervisory body for the Board
- is responsible for governance issues and ensuring each body is properly funded

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Objectives of IFRS?

A
  • developing a set of global accounting standards of high quality which are understandable and enforceable
  • promoting the use and application of these standards
  • bringing about the convergence of national and international accounting standards
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

International Accounting Standards Board ( The Board)

A
  • is solely responsible for issuing International Financial Reporting Standards
  • intentions are to develop a single set of understandable and enforceable high quality worldwide accounting standards
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

International Financial Reporting Interpretations Committee (IFRIC)

A
  • issues rapid guidance on accounting matters where divergent interpretations of IFRS Standards have arisen
  • these must be approved by the Board
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

IFRIC , interpretations covers:

A
  • newly identified financial reporting issues not specifically dealt with in IFRS Standards
  • issues where unsatisfactory or conflicting interpretations have developed
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

IFRS Advisory Council (IFRSAC)

A
  • provides a forum for the Board to consult a wide range of interested parties affected by Board’s work, with the objectives of:
  • advising the Board on agenda decisions and priorities in the Board’s work
  • informing the Board of the view of the organisations and individuals
  • giving other advice to the Board or to the Trustees
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Development of an IFRS Standard

A
  • The Board identifies a subject and appoints and advisory committee to advise on the issues
  • The Board may issue a discussion paper to encourage comment
  • The Board publishes an exposure draft, being a draft version of the intended standard
  • Following the consideration of comments received on the draft, the Board publishes the final text of the IFRS Standard
  • The publication of an IFRS Standard, exposure draft or IFRIC Interpretation of an Interpretation requires the votes of at least eight of the 15 Board members
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is a conceptual framework?

A
  • a coherent system of interrelated objectives and fundamental principles
  • a framework which prescribes the nature, function and limits of financial accounting and financial statements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Advantages of a rules-based system

A
  • increased accuracy of requirements
  • increased comparability
  • increased verifiability
  • less scope for judgemental manipulation of figures
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What includes guidance of Conceptual Framework for Financial Reporting?

A
  • the objective of financial reporting
  • the qualitative characteristics of financial information
  • the definition, recognition and measurement of the elements of financial statements
  • concepts of capital and capital maintenance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the purpose of Framework?

A
  • assist the International Accounting Standards Board to develop IFRS Standards that are based on consistent concepts
  • assist preparers to develop consistent accounting policies when no Standard applies to a particular transaction
  • assist all parties to understand and interpret the Standards
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the objective of financial reporting?

A
  • to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity
17
Q

What are qualitative characteristics?

A
  • are the attributes that make information provided in financial statements useful to others
18
Q

What are 2 qualitative characteristics?

A
  • Fundamental qualitative characteristics
  • Enhancing qualitative characteristics
19
Q

What are fundamental qualitative characteristics?

A
  • Relevance
  • Faithful representantion
20
Q

What are enhancing qualitative characteristics?

A
  • Comparability
  • Verifiability
  • Timeliness
  • Understandability
21
Q

When information is relevant?

A
  • it has the ability to influence the economic decisions of users
  • is provided in time to influence those decisions
22
Q

Qualities of relevance

A
  • Predictive value: enables users to evaluate or assess past, present or future events
  • Confirmatory value: helps users to confirm or correct past evaluations and assessments.
23
Q

What is materiality?

A
  • is an entity-specific aspect of relevance and depends on the size of the item or error judged in the particular circumstances of its omission or misstatement.
  • is a threshold quality
24
Q

When is the information material?

A
  • if omitting ,misstating or obscuring it would influence the economic decisions of users
25
Q

Characteristics of faithful representation

A
  • completeness: all necessary descriptions and explanations
  • neutrality: free from bias
  • free from error
26
Q

Enhancing qualitative characteristics

A
  • comparability
  • verifiability
  • timeliness
  • understandability
27
Q

Comparability

A
  • must be there consistency and disclosure
  • users must be able to:
  • compare the financial statements of an entity over time to identify trends in its financial position and performance
  • compare the financial statements of different entities to evaluate their relative financial performance and financial position
28
Q

What does direct verification means?

A
  • verifying an amount or other representation through direct observation, for example, by counting cash
29
Q

What does indirect verification means?

A

Indirect verification means checking the inputs to a model, formula or other technique and recalculating the outputs using the same methodology

30
Q

What does timeliness means?

A
  • having information available to decision makers in time to be capable of influencing their decisions
31
Q

What understandability depends on?

A
  • the way in which information is presented
  • the capabilities of users
  • it assumed that users:
    have a reasonable knowledge of business and economic activities
    review and analyse the information diligently
32
Q

What is an asset?

A
  • a present economic resource controlled by the entity
  • as a result of past events
33
Q

What is an economic resource?

A
  • is a right that has the potential to produce economic benefit
34
Q

What is a liability?

A
  • a present obligation of the entity
  • to transfer an economic resource as a result of past events
35
Q

What is equity interest?

A
  • is the residual interest in the assets of the entity after deducting all its liabilities
36
Q

What is income?

A
  • is increases in asset or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims
37
Q

What are expenses?

A
  • decreases in assets or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims
38
Q

What is derecognition?

A
  • is the removal of some or all of an asset or liability form the statement of financial position
  • occurs when: loses control of the asset
    has no present obligation for the liability
39
Q

Standard setting process

A
  • public board meetings
  • agenda papers
  • agenda consultation
  • discussion paper
  • exposure draft
  • revised exposure draft
  • new IFRS issued
  • new IFRS adopted
  • post-implementation review

Financial Reporting (FR) (22 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions