Regulatory Framework Flashcards
Why regulatory framework is necessary?
To act as a central source of reference of GAAP
Designate a system of enforcement for GAAP
What is principles-based?
IFRS standards are written based on definition of elements of FSs
What does principles-based approach mean?
Cover a wide variety of scenarious without need for very detailed scenario by scenario guidance
Advantage of principles-based?
Based on single conceptual framework
Rules can be broken, but principles “catch all”
Principles reduce need for excessive detail
Disadvantage of principles-based?
Out of date practices
Advantage of IFRS accounting standards?
International consistency and comparability
Greater control of foreign operaitons
Reduce costs of maintaining national regulatory framework
Disadvantage of IFRS accounting standards?
Interference with national laws
May not meet local needs
Objectives of IASB?
Develop high quality global accounting standards
Promote use of such standards
Bring about convergence of national accounting standards
Standard setting process?
Issues paper => Discussion paper => Exposure draft => IFRS
Advantage of IASB?
Reduce and eliminate confusing variations
Focal point for debate and discussions
Oblige companies to disclose accounting policies
Disadvantage of IASB?
Many national standards aren’t based on concpetual framework of accounting
Trend towards rigidity
ISSB?
Emphasis on environmental, social and governance (ESG) matters
Issues paper?
IASB staff prepare an issues paper studying the approach of national standard setters
Step between issues paper and discussion paper?
IFRS advisory council is consulted about advisability of adding topic to IASB’s agenda
What is discussion paper?
May be published for public comment
