SBR Flashcards
Ethics Query
CHANGE IN POLICY
IAS1 - Present Fairly
Follow IFRS + CC
2 change policy - More relevant & reliable info
Question motivations
Financial statements must meet the following criteria
1) Technical compliance: GAAP used.
2) Economic substance: the event that has occurred must be represented (over and above GAAP)
3) Full disclosure and transparency: Sufficient disclosures made
Accounting professionals are expected to be
1) highly competent
2) reliable
3) objective
4) high degree of professional integrity.
Social & Environmental Reporting
Recognise all stakeholders
positive step - build good relationships
Government pressure
impact on climate & sustainibilty
responsible practise increases share value
EBITDA
Widely used to measure corporate earnings
better insight into management performance
Open to manipulation
No IFRS
Not defined - reduce usefulness
Earnings management
intent to influence outcomes that depend on stakeholder assessments
deceive shareholders
manipulation of the FR for private gain
cannot be sustained
Ratio Analysis
Improved or deteriorated?
Explain why from scenario
Long term implications & recommendations
Human Capital Reporting
Workforce - an asset that needs managing
Includes - Size, Retention, Skills, Training, Remuneration, Succession planning
Asset - definition
A present economic resource controlled by the entity as a result of past events.
Economic Resource
A right that has the potential to produce economic benefit
Control
POWER - Ability to direct use
BENEFITS - Ability to obtain benefit
Liability - definition
A present obligation of the entity to pay an economic resource as a result of past events
A Present obligation
a duty or responsibility that the entity has no practical ability to avoid
Recognition - when
Relevant - low probable? - existence
Faithful Rep - measurement uncertainty
Faithful Representation means
1 Substance over form
2 Represents the economic phenomena
3 Completeness, Neutrality & Verifiability
