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Financial Reporting > The Regulatory Environment > Flashcards

The Regulatory Environment Flashcards

1
Q

GAAP =

A

Generally accepted Accounting Principle

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2
Q

Who actually writes/ sets standards?

A

International Accounting Standards Board

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3
Q

IFRS Advisory Council

A

Provides a forum for organisations and individuals to participate in standard setting process. Advises Board and Trustees

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4
Q

IFRS Interpretations Committee

A

Explain how to apply standards post publication

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5
Q

How many IASs in issue?

A

41

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6
Q

How many IFRSs in issue?

A

16

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7
Q

IFRSs =

A

IFRSs and IASs

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8
Q

IASB

A

Prepares IFRSs

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9
Q

Objective of financial reporting (for user)

A

To provide financial information about reporting entity that can be used to assess entity’s prospects for the future

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10
Q

Fundamental Qualitative characteristics (2)

A
  • Relevance

- Faithful representation

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11
Q

Enhancing Qualitative characteristics (4)

A
  • Comparability
  • Verifiability
  • Timeliness
  • Understandability
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12
Q

Faithful representation (4)

A
  • Substance over form
  • Neutrality
  • Free from error
  • Completeness
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13
Q

To be recognised in the financial statements must (3)

A
  • Meet definition of element
  • Be measured reliably
  • Probable future economic benefit will flow to or from entity
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14
Q

Measurement of elements of financial statements (4)

A
  • Historical cost
  • Present value
  • Realisable value
  • Current cost
    Framework does not say which
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15
Q

Concepts of capital and capital maintenance

A

How entity defines capital it seeks to maintain. Difference between return of capital, and return on capital.

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16
Q

Objectives IFRS Advisory Council (3)

A
  • Give advice on IASB agenda decisions and priorities
  • Inform IASB views organisations/ individuals
  • Advise board/ trustees
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17
Q

ResponsibilitIes IFRS IC (2)

A
  • Review on a timely basis newly identified financial reporting issues
  • Clarify issues where unsatisfactory/ conflicting interpretations arise
18
Q

IFRSs used for (5)

A
  • National requirements
  • Basis for national requirements
  • International benchmark
  • By regulatory authorities
  • By companies themselves
19
Q

Due process

A

Timely, thorough and open study financial accounting

20
Q

Standard setting process (5)

A

1) Establish consultative group give advice issues arising
2) Steering committee set up
3) IASB publishes Discussion doc for public comment
4) Exposure draft produced following receipt and review comments
5) Final IFRS issued

21
Q

IFRSs NOT

A

Applied to immaterial items/ not retrospective

22
Q

Purpose conceptual framework (6)

A
  • Assist IASB in future development standards
  • Reduces number alternative accounting treatments permitted
  • Assist preparers financial statements applying standards
  • Helps users interpret information in financial statements
  • Provides information for approach IASB
23
Q

Is conceptual framework accounting standard

A

No and cannot override accounting standard

24
Q

Objective financial reporting

A

Provide financial information about reporting entity that is useful to existing and potential investors, lenders and other creditors

25
Q

To assess entity’s prospects for future, need info about

A
  • Resources of entity
  • Claims against entity
  • How efficiently and effectively entity’s management have discharges repsonsibilites
26
Q

Underlying assumption

A

Going concern

27
Q

Relevance

A

Relevant to decision making needs user

28
Q

Faithful representation

A

Way transaction represented corresponds closely with actual effect

29
Q

Neutrality

A

Not selected or presented in way that influences decision making or judgment users

30
Q

Free from error

A

Within bounds materiality.

31
Q

Completeness

A

Complete, omissions are misleading

32
Q

Comparability

A

Must be able compare over period time

33
Q

Verifiability

A

Direct or indirect > checking to cash/ checking inputs to model

34
Q

Timeliness

A

Information available to decision makers in time to be able influence decisions

35
Q

Understandability

A

Understandable by users

36
Q

Asset

A

Resource controlled by enterprise as result past events, from which future economic benefits expected flow to enterprise

37
Q

Liability

A

Entity’s obligation transfer future economic benefits as result past transactions or events

38
Q

Equity

A

Residual amount found by deducting liabilities of entity from entity’s assets

39
Q

Income

A

Increases economic benefits during accounting period in form inflows/ enhancements assets/ decreases liabilities

40
Q

Expenses

A

Decreases in economic benefits during accounting period in form outflows/ depletion assets, incurrence of liabilities

41
Q

Recognition elements in financial statements (3)

A
  • Meet definition asset
  • Benefit must flow to / from entitity
  • Measured reliably

Financial Reporting (3 decks)

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