FAR - Framework/Overview - FASB, IASB Flashcards
IFRS monitoring board
- Link between IFRSF and public authorities
- IFRSF trustees are accountable
- Members are authorities from public capital markets such as SEC and IOSCO
- actions are transparent and accountable
IFRS Foundation
- independent, NFP, private sector org
- parent of IASB
- appoints members of IASB, IFRS advisory council, & IFRS Interpretations Committee
- trustees - 3 year terms, 1 year renewable
IFRS Foundation objectives
1) develop single set of high-quality, understandable, enforceable, & globally accepted financial reporting standards
2) promote use/rigorous application of IFRS
3) consider needs of a range of size/type entities
4) promote/facilitate adoption of IFRS convergence
IASB
- establishes IFRS (based on framework)
- no enforcement power
- enforcement (responsibility of securities regulators)
- ISAB 2001-present
- 16 members
- evolved from Int’l Acct Standards Committee (IASC)
- 5 yr term, 1 yr renewable
IFRS Interpretations Committee
- similar to FASB’s Emerging Issue Task Force
- identifies/reviews issues (reviewed by IASB)
- members appointed by IFRS Foundation
IFRS Advisory Council
- advises IASB on priorities/views of interested orgs
- representation of over 40 orgs from around the world
- members of council appointed by IFRS foundation
IOSCO
IFRS rules are more principle based?
IASB Due Process
International Org of Securities Commission, promotes high standards of regulation to ensure transparent/efficient capital markets
Yes
1) Add the item to the Working Agenda (IV),
2) Discuss the issue (V),
3) Prepare the Discussion Paper (III),
4) Publish the discussion paper (VII)
5) Issue the Exposure Draft (II)
6) Analyze comments to the Exposure Draft and (I)
7) Issue the IFRS (VI)
Highest level of international gaap?
IFRS simplification for SME
IFRS omitted topics for SME
IFRS
1) irrelevant topics are eliminated
2) recognition and measurement aspects simplified
3) disclosures reduced by 10%
1) EPS
2) Interim Financial Reporting
3) Segment Reporting
when can SME revisions occur?
Under IFRS, if no standards exist on an accounting issue, what should companies use?
SEC eliminated a requirement in 2007 for foreign companies?
Examples of SME simplified recognition/measurement
once every 3 years
The definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework.
A reconciliation of earnings and equity to U.S. Generally Accepted Accounting Principles (Form 20-F) in their financial statements.
1) Amortized Goodwill
2) borrowing/R&D costs expensed
3) categories of investment in financial assets are reduced
FASB - income elements?
IASB - income elements?
Purpose of IASB framework?
IASB Framework Assumptions?
5 IASB elements?
Elements from FASB, not in IASB?
When recognize element in IASB framework?
1) revenue and 2) gains (treated separately)
revenue and gains treated together
- develop new International Accounting Standards
- promote harmonization of standards
- provide information to interested parties.
1) accrual method used
2) entity is going concern
1) assets, 2) liab, 3) equity, 4) income, 5) expenses
1) owner’s investment, 2) owner distrib. 3) gains 4) losses 5) comprehensive income
- probable that there is a future economic benefit/item has a cost/value that can be measured with reliability.
True/False
IASB framework applies to both public/private
Income may be realized/unrealized
reliable measurement is in which a reasonable estimate is used
To provide guidance in accounting for specific transactions, events or conditions is not a purpose of the IASB Framework.
True
True
True
True
advantages of using IFRS - SMEs, instead of U.S. GAAP,
What type of GAAP may be used?
Entities not allowed to use IFRS - SME?
More relevant standards;
Less complicated and voluminous standards;
Less costly standards to implement;
Less frequent changes in standards.
1) OCBOA
2) GAAP
3) IFRS
4) IFRS - SME
Entities that are required to file financial statements with a regulatory body (e.g., SEC) for the purpose of issuing securities in a public market; or
Entities that hold assets in a fiduciary capacity for a broad group of outsiders (e.g., banks, insurance companies, pension funds, etc.).
True/False
There are separate international standards for preparing financial statements by small- and medium-sized entities.
A U.S. entity may use IFRS for SMEs only if it engages in international business activity.
Under IFRS for SMEs, either the cost method or equity method may be used by an investor to account for an investment in another entity (called an “associate” in IFRS for SMEs) over which the investor has significant influence. Under U.S. GAAP, only the equity method may be used.
True
False
True
GAAP/IFRS Differences
B/S
GAAP vs. IFRS
Shareholder’s Equity
GAAP vs. IFRS
I/S
GAAP -
IFRS -
Comprehensive Income
GAAP-
IFRS-
B/S
GAAP - comparative periods not required (unless SEC registrant)
IFRS - comparative periods required
S/H Equity
GAAP - changes can be presented in footnotes
IFRS - changes must be presented in a separate statement
I/S
GAAP - reporting special items prescribed
- div/per share not required
- extraordinary allowed
IFRS - no requirement on reporting special items
- div/per share require disclosure
- extraordinary not allowed
Comprehensive income
GAAP - no revaluation of PPE through OCI
- per share measures prohibited
IFRS - permits revaluation of PPE through OCI
- per share measures are not prohibited
SCF Differences
GAAP -
IFRS -
GAAP IFRS
Interest paid O O/F
Interest Rec’d O O/I
Taxes paid O O/I/F
Div Rec’d O O/I
Div paid F O/F
Cash/equiv bank overdraft not allowed allowed
