General Theory Flashcards
What are the four main professional accounting associations?
Certified Practicing Accountants Australia (CPA)
Institute of Chartered Accountants Australia (ICAA)
The Institute of Public Accountants (IPA)
Financial Planning Association of Australia Limited (FPAA)
What do the professional Accounting Associations do?
The give their members:
Professional Recognition
International standing in the world of accountants
Supply further training and promotion
Assist with participation in professional activities
Provide professional and social neworking
What do professional accounting associations have to do with the regulation of accounting information in Australia?
They assist:
If appointed as a member of the FRC (Financial Reporting Council) or the AASB.
If appointed to a committee or advisory group established by the FRC
If appointed to a committee, or advisory panel or consultative group established by the AASB
Be means of one of their staff members being engaged as staff of, or consult to, the AASB
Being involved in the process of setting Accounting Standards
By engaging in general public debate on issues relating to Accounting Standards
How do the professional associations assist in maintaining professional standards?
Requiring continuing education for all members
Organizing professional development activities to assist in continuing education
Providing support services such as newsletters, journals, libraries seminars and materials to keep members up to date
Providing technical and financial support to government and regulating agencies
Liaising with International accounting organisations
Providing quality assurance programs for members
Maintaining and enforcing a codes of ethical conduct
What is an accounting standard?
An accounting standard is a technical pronouncement that sets out the required accounting for particular types of transactions and events. The accounting requirements affect the preparation and presentation of an entities financial statements.
Purpose of accounting standards in the corporate world?
GPFR’s that comply with accounting standards should present fairly the financial position, financial performance and cash flows of an organization
This information will be useful to (owners, decision makers and investors) in making decisions relating to the allocation of scarce economic resources
GPFR’s are important in the corporate world to compare organizations to allow users to make investing decisions
What Does the AASB stand for/do?
AASB - Australian Accounting Standards Board
Develops a framework for the purpose of evaluating all proposed standards
To make accounting standards
To formulate accounting standards for other purposes
To participate in and contribute to the development of International Accounting Standards (IAS)
To allow Australian entities to compete effectively overseas
To maintain investor confidence in the Australian economy
What does the FRC stand for/do?
FRC - Financial Reporting Council
Offers strategic guidance to the AASB
FRC set up by the treasurer who has to over arching responsibilities for the accounting standards
What does the ASIC stand for/do?
ASIC - Australia Securities and Investing Commission
The Australian Securities and Investing Commission is responsible for the enforcement of the accounting standards issued by the AASB under the Corporations Act 2001
What does the IASB stand for/do?
IASB- International Accouting Standards Board
Develop a single set of high quality global accounting standards that require transparent and comparable information in GPFR’s
The IASB co-operates with national standards setters (like the AASB) to achieve convergence in accounting standards around the world.
What is the purpose of The Framework
Assist the AASB in the development of future Australian Accounting Standards (AAS)
Assist the AASB in evaluating proposed International Accounting Standards (IAS)
Assist preparers of financial statements in applying AAS
Assist preparers of financial statements where no AAS exists
Assist auditors in forming an opinion as to whether financial statements conform with AAS
Assist users of financial statements in interpreting the information contained within financial statements
What is the assumption that underpins the framework
The going concern assumption underpins the framework and states that a business will continue with operation unless there is sufficient evidence to suggest otherwise
What are the recognition criteria of Assets, Liabilities, Income and Expenses?
It is probable that and future economic benefit associated with the item is expected to flow to/from the entity
The item has a value that can be measured with reliability
What are the objectives of GPFR’s?
GPFR to provide information useful to users for making and evaluating decisions about the allocation of scarce economic resources
To provide information in a manner which assists in discharging that accountability of management
To provide information about the financial position of the entity
To provide information about the financial performance of an entity
GPFR to provide information about an entity’s cash flow to help with investing, solvency and liquidity decisions
What are the 7 qualitative characteristics of GPFR’s
Relevance Materiality Faithful Representation Comparability Consistency Timeliness Understandability
