POA 02

• IASB meaning - International Accounting Standards Board
• International Accounting Standards Board

  • Establish in 2001,the _ _ _ (_ _ _) is an Independent private sector body.
  • To achieve convergence in the accounting principles that are used by businesses and other organizations for financial reporting around the world.
• Monitoring Board

  • They approve and oversee trustees
• IFRS Foundation

  • 22 trustees. Appoint, oversee, raise funds.
• IFRS Advisory Council

  • Approx 40 members
• Monitoring Board

  • _ _ is to serve as a mechanism for formal interaction between capital market authorities.
  • Participating in the process for appointing trustees and approving the appointment of trustees according to the guidelines set out in the IFRSF constitution
  • Reviewing and providing advice to the trustees on their fulfilment of the responsibilities set out in the IFRSF constitution. The trustees will make an annual written report to the Monitoring Board.
• IFRS Foundation

  • Formerly IASC Foundation, is an independent, not-for profit private sector organization working in the public interest.
• International Accounting Standards Board

  • Is the independent standard-setting body of the IFRS Foundation. Its members are responsible for the development and publication IFRSs.
• IFRS Advisory Council

  • The _ _ _(formerly Standards Advisory Council) has 40 members and provides a forum for organizations and individuals with an interest in international financial reporting to participate in the standard setting process
• IFRS Interpretations Committee

  • The _ _ _ (formerly called the IFRIC) is the interpretative body of the IASB.
  • The mandate of the Interpretations Committee is to review on a timely basis widespread accounting issues that have arisen within the context of current IFRSs and to provide authoritative guidance (IFRICs) on those issue
• Accounting Standards

  • are authoritative statements of how particular types of transaction and other events should be reflected in financial statements. Accordingly, compliance with accounting standards will normally be necessary for the fair presentation of financial statements.
• (7) Users and Their Information Needs (Financial Statement)

  • Investors
  • Employees
  • Lenders
  • Suppliers and other trade creditors
  • Customers
  • Government and their agencies
  • Public
• Investors

  • need information to help them determine whether they should buy, hold or sell.
• Employees

  • are interested in information about the stability and profitability of their employers
• Lenders

  • are interested in information that enables them to determine whether their loans and the related interest will be paid when due.
• Suppliers and other trade creditors

  • are interested in information that enables them to determine whether amounts owing to them will be paid when due.
• Customers

  • have an interest in information about the continuance of an enterprise, especially when they have a long-term involvement with, or are dependent on, the enterprise.
• Government and their agencies

  • are interested in the allocation of resources and, therefore, the activities of the enterprises. They also require information in order to regulate the activities of the enterprises, determine taxation policies and as the basis for national income and similar statistics.
• Public

  • Enterprises affect members of the public in a variety of ways
• Objective of Financial Statements

  • is to provide information about the financial position, performance, and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions
• Stewardship

  • Financial statements also show the results of the _ of management, that is the accountability of management for the resources entrusted to it by the owner(s).
• 3 Underlying Assumption

  • Accrual Basis
  • Cash Basis
  • Going Concern
• Accrual Basis

  • The effects of transactions and other events are recognized when they occur and not as cash is received or paid. This means that the accountant records revenues as they are earned and expenses as they are incurred
• Cash Basis

  • The accountant does not record a transaction until cash is received or paid.
• Going Concern

  • The financial statements are normally prepared on the assumption that an enterprise is a going concern and will continue in operation for the foreseeable future. Hence, it is assumed that the enterprise has neither the intention nor the need to liquidate or curtail materially the scale of its operations.
• Materiality - Threshold Quality

  • A _ quality (or a cut off point) is one that needs to be considered before considering the other qualities of information.
  • _ depends on the size of the item or error judged in the particular circumstances of its omission or misstatement.
• What makes financial information useful?

  • Materiality
  • Relevance
  • Reliability
• Relevance

  • Information has the quality of _ when it influences the economic decisions of users by helping them evaluate past, present or future events, confirming, or correcting, their past evaluations.
• Financial information has a predictive role when it is used to make predictions of, for instance future cash flows or income.
• What makes information reliable?

  • Reliability
  • Faithful Representation
  • Substance over form
  • Neutrality
  • Prudence/Conservatism
  • Completeness
• Primary Qualitative Characteristic Relating to Presentation

  • Comparability
  • Understandability
• Elements of Financial Statements|

  • The elements directly related to the measurement of financial position in the balance sheet are asset, liabilities, and equity.
• The elements directly related to the measurement of performance in the income statement are income and expenses.
• Measurement of the Elements of Financial Statements

  • Historical Cost
  • Current Cost
  • Realizable (Settlement) Value
  • Present Value
• (2) Concepts of Capital and Capital Maintenance

  • Financial concept
  • Physical Concept
• Financial concept

  • of capital, such as invested money or invested purchasing power, capital is synonymous with the net assets or equity of the enterpri
• Physical Concept

  • of capital, such as operating capability, capital is regarded as the productive capacity of the enterprise based on, for example, units of output per day