Created at 10/23/2012 11:53 AM by System Account, (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London, Last modified at 11/30/2012 11:42 AM by System Account, Auditors' responsibilities regarding fraud, Auditors' responsibilities regarding laws & regulations, Reporting to those charged with governance, Reporting deficiencies in internal control systems, The components of an internal control system, The scope and regulation of audit and assurance, Critical success factors and core competences, Non-financial performance indicators (NFPIs), Theories of corporate social responsibility, Conflicts of interest and ethical threats, The consolidated statement of financial position, Controlling the Financial Reporting System, The trial balance and errors in the FR system, The Context and Purpose of Financial Reporting, International Financial Reporting Standards, Chapter 4: Types of cost and cost behaviour, Chapter 5: Ordering and accounting for inventory, Chapter 9: Marginal and absorption costing, Chapter 10: Books of prime entry and control accounts, Chapter 11: Control account reconciliations, Chapter 13: Correction of errors and suspense accounts, Chapter 18: Consolidated statement of financial position, Chapter 19: Consolidated income statement, Chapter 2: Statement of financial position and income statement, Chapter 20: Interpretation of financial statements, Chapter 21: The regulatory and conceptual framework, Chapter 7: Irrecoverable debts and allowances for receivables, Chapter 9: From trial balance to financial statements, Chapter 1: Essential elements of legal systems, Chapter 2: International business transactions: formation of the contract, Chapter 3: International business transactions: obligations, Chapter 4: International business transactions: risk and payment, Chapter 5: International business forms agency, Chapter 6: Types of Business Organisation, Chapter 7: Corporations and legal personality, Chapter 1: Traditional and advanced costing methods, Chapter 11: Performance measurement and control, Chapter 12: Divisional performance measurement and transfer pricing, Chapter 13: Performance measurement in not-for-profit organisations, Chapter 3: Planning with limiting factors, Chapter 5: Make or buy and other short-term decisions, Chapter 9: Standard costing and basic variances, Chapter 15: Additional practice questions, Chapter 4: Ethics and acceptance of appointment, Chapter 1: The financial management function, Chapter 10: Working capital management cash and funding strategies, Chapter 19: Business valuations and market efficiency, Chapter 2: Capital budgeting and basic investment appraisal techniques, Chapter 3: Investment appraisal discounted cash flow techniques, Chapter 4: Investment appraisal further aspects of discounted cash flows, Chapter 5: Asset investment decisions and capital rationing, Chapter 6: Investment appraisal under uncertainty, Chapter 8: Working capital management inventory control, Chapter 9: Working capital management accounts receivable and payable, Chapter 10: Risk and the risk management process, Chapter 13: Professional and corporate ethics, Chapter 15: Social and environmental issues, Chapter 2: Development of corporate governance, Chapter 5: Relations with shareholders and disclosure, Chapter 6: Corporate governance approaches, Chapter 7: Corporate social responsibility and corporate governance, Chapter 1: The nature of strategic business analysis, Chapter 10: The role of information technology, Chapter 12: Project management I The business case, Chapter 13: Project management II Managing the project to its conclusion, Chapter 16: Strategic development and managing strategic change, Chapter 2: The environment and competitive forces, Chapter 3: Internal resources, capabilities and competences, Chapter 4: Stakeholders, governance and ethics, Chapter 5: Strategies for competitive advantage, Chapter 6: Other elements of strategic choice, Chapter 7: Methods of strategic development, Chapter 1: The role and responsibility of the financial manager, Chapter 11: Corporate failure and reconstruction, Chapter 13: Hedging foreign exchange risk, Chapter 15: The economic environment for multinationals, Chapter 16: Money markets and complex financial instruments, Chapter 17: Topical issues in financial management, Chapter 2: Investment appraisal methods incorporating the use of free cash flows, Chapter 3: The weighted average cost of capital (WACC), Chapter 4: Risk adjusted WACC and adjusted present value, Chapter 5: Capital structure (gearing) and financing, Chapter 7: International investment and financing decisions, Chapter 9: Strategic aspects of acquisitions, Chapter 1: Introduction to strategic management accounting, Chapter 10: Non-financial performance indicators and corporate failure, Chapter 11: The role of quality in performance management, Chapter 12: Current developments in performance management, Chapter 4: Changes in business structure and management accounting, Chapter 5: The impact of information technology, Chapter 6: Performance measurement systems and design and behavioural aspects, Chapter 7: Financial performance measures in the private sector, Chapter 8: Divisional performance appraisal and transfer pricing, Chapter 9: Performance management in not-for-profit organisations, Chapter 6: Order quantities and reorder levels, The%20Consolidated%20Statement%20of%20Financial%20Position, The qualitative characteristics of financial information, The Trial Balance and Errors in the Financial Reporting System, Auditors' Responsibilities Regarding Fraud, Auditors' Responsibilities Regarding Laws and Regulations, Budgeting in not-for-profit organisations, Corporate social responsibility and management systems, Development%20of%20corporate%20governance, Environmental Management Accounting (EMA), Fitzgerald and Moon's Building Block Model, International%20Federation%20of%20Accountants, Mintzberg - The ten skills of the manager, Professional advice and negligent misstatement, The%20Code%20of%20Ethics%20for%20Professional%20Accountants, Unfair Terms in Consumer Contract Regulations 1999, Using option pricing theory to value equity, Using probability theory to determine credit spreads, ACCA P5 - Advanced Performance Management, AAT- Prepare Financial Accounts for Sole Traders and Partnerships (FSTP) Exam, AAT-Control Accounts, Journals and the Banking System(CJBS) Exam, AAT-Processing Bookkeeping Transactions(PBKT) Exam, AAT- Internal Control and Accounting Systems (ISYS), Modification Through Additional Paragraphs, Chapter 10: Working capital management cash and funding strategies. To help to achieve comparability, the same items should be presented and measured in the same way in financial reports from year to year. d. Relevance, According to the Conceptual Framework, predictive particular circumstances. a. d. Comparability, The ability through consensus among measures to However, under extremely rare circumstances management may conclude that compliance with the certain provisions of standards will be so misleading that it would conflict with the objectives of financial statements as stated in the IASB Framework. Correct. It considers a variable of interest (the model output) and defines its underlying, or causal, factors. Relevance: In accounting, the term relevance means it will make a difference to a decision maker. HT]o@|)}#P ni((_vgfg)rM>]/g-f')PLui^W}d,nn>qz}5]""z6& "4zX|] ?zl&X^N h$p2\_Yb~jr=M(_\pEUgS&tWw@ cG! 8 >&-kaZiK" "XCf;!U@h#"A#r e" xuQ]rY#9!P ;y]Byc}lk:8'3b!AeU Relevance - financial information is regarded as relevant if it is capable of influencing the decisions of users. 0000003068 00000 n In addition, the IASB states that relevant information can be both predictive and confirmatory. Key words: Relevance, faithful representation, cash-basis, accrual-basis, fair value, GAAP, tax reporting. from error. o`SD772,)AQi1er+ Objective 11 financial statements shall be accompanied by Which of the following situations violates the Oxford University Press, 2019Privacy Policy and Legal Notice | Terms and conditions of use, Correct. For example, company had sold the asset but is still responsible for maintaining it or other risks then if this transaction is reported as sales instead of secured loan will not faithfully represent the transaction and thus will distort the effect of the transaction and may have the potential to influence users decisions. detriment of others? >d4%?s G'']&dwz=h^"1+3r!L;x*q%lC`Z05/2/'1 *W 5 ^Im-:y3K^@(q. 10 statement is true in relation to the enhancing d. Conservative. B1P9 &%%cckh(H bx~i/ H3 . A+ Relevance refers to the property of information being capable of making a difference in decisions made by users of that information. stream xc```;x&@8f`Mady$9T}S:[; A present, obligation may arise as a legal obligation and also as an obligation imposed by. Preparers of statements should not try to increase Correct. b. Relevance to consistent standards. Adobe PDF Library 10.0.1 amount increased to management estimate of endstream endobj 106 0 obj <> endobj 107 0 obj [108 0 R] endobj 108 0 obj <>>> endobj 109 0 obj <> endobj 110 0 obj <> endobj 111 0 obj <> endobj 112 0 obj <> endobj 113 0 obj <> endobj 114 0 obj <> endobj 115 0 obj <> endobj 116 0 obj <> endobj 117 0 obj <> endobj 118 0 obj <> endobj 119 0 obj <>/Border[0 0 0]/Type/Annot>> endobj 120 0 obj <>/Border[0 0 0]/Type/Annot>> endobj 121 0 obj <>/Border[0 0 0]/Type/Annot>> endobj 122 0 obj <>/Border[0 0 0]/Type/Annot>> endobj 123 0 obj <>/Border[0 0 0]/Type/Annot>> endobj 124 0 obj <>/Border[0 0 0]/Type/Annot>> endobj 125 0 obj <>/Border[0 0 0]/Type/Annot>> endobj 126 0 obj <> endobj 127 0 obj <> endobj 128 0 obj <> endobj 129 0 obj <> endobj 130 0 obj <> endobj 131 0 obj <> endobj 132 0 obj <> endobj 133 0 obj <> endobj 134 0 obj <> endobj 135 0 obj <> endobj 136 0 obj <> endobj 137 0 obj <> endobj 138 0 obj <> endobj 139 0 obj <> endobj 140 0 obj <>/Font<>/ProcSet[/PDF/Text/ImageC]/Properties<>/ExtGState<>>> endobj 141 0 obj <> endobj 142 0 obj <> endobj 143 0 obj <> endobj 144 0 obj <>stream Faithful Representation. 0000006466 00000 n a. Relevance 0000002640 00000 n accounting process and the technical terminology in Information that has no bearing on an economic d. Free from error. 5z3ZT01.o*/7"W=0z@. to represent is an example of the concept of 4SI[Ez&@kmrm R_[(ow#:9AZk Fu-L90Q9e Conservatism %PDF-1.5 1 To be relevant, information must had a predictive value (can predict future outcomes) and must have a confirmatory value (it provides feedback. information requires that information should not be Can be depended on to represent the economic Accounting information is relevant when it is provided in time, but at early stages information is uncertain and hence less reliable. 2 in 2010. Must be complete, neutral and reasonably free But its up to management to ensure that financial statements achieve true and fair view by achieving the objectives of the financial statements as laid down under IASB Framework. Simply put, IAS 1 almost equates the fair presentation with the compliance with accounting standards which is presumed to result in the fair presentation of financial statements. The decision usefulness of information is enhanced if it is available to users in time for it to be capable of influencing their decisions. The faithful representation concept should extend to all parts of the financial statements, including the results of operations, financial position, and cash flows of the reporting entity. Faithful representation is affected by the use of estimates and by uncertainties associated with items recognised and measured in financial statements. answer choices Relevance Understandability Faithful representation Comparability Question 11 30 seconds Q. Consistency of presentation and measurement of the same items in the same way from year to year will help to achieve comparability. This exercise should be completed after reading pages 11-14 of Chapter 1. Consistency a. Predictive value and confirmatory value b. The financial statements represent the actual state of an organization, without trying to amplify its results unnecessarily or make them look worse than they really are. Relevance (primary characteristic)Information is relevant if it makes a difference to decision makers in their role as Conceptual Framework (Qualitative Characteristics), What are the attributes that make the information 0000005992 00000 n endstream endobj 42 0 obj <>stream c. Predicative value Your instructor will divide the class into two to six groups depending on the size of the class. This is known as true and fair override. Syllabus A. are expected to flow to the entity even though there is no legal ownership. c. Neutrality 0000025211 00000 n Expenses should be reported when incurred. Financial information must not only represent relevant economic data it must also faithfully represent the phenomena that it purports to represent. Applying different accounting treatment to similar Revenue realization d. Comprehensibility to users, To achieve faithful representation, the financial c. Timeliness d. Expenditures are reported as expenses. uuid:aecbdef8-378f-4474-85d1-883a272b1460 b. application/pdf 1 Question 1: Relevance, faithful representation, comparability, verifiability, timeliness and understandability. d. Completeness, The enhancing qualitative characteristics of Comparability it should be possible to compare an entity over time and with similar information about other entities. Adobe InDesign CS6 (Macintosh) What is meant by comparability when discussing Components/Aspects to Fundamental Characteristics a) b) c) d) e) f) 3. 0000005678 00000 n Relevant, not faithfully represented, information must be capable of making a difference in users' decisions. The two fundamental Qualitative characteristics are : Relevance. d. Accounting procedures should be adopted In this paper the two main concerns that will be addressed are those of relevance and reliability with a focus on concerns of providing a faithful representation of both annual and interim financial reports. 247 0 obj <>stream b. c. Relevant of accounting information. Correct. FR. a. accounting treatment each period. risks are reported to analysts estimating future A fundamental qualitative characteristic is Accountants (IESBA), published by the International Federation of Accountants (IFAC) in December 2012 and is used with permission of IFAC. c. Comparability There is sometimes a trade-off between relevance and faithful representation . Users have a reasonable knowledge of business The fundamental qualitative characteristics are 0000061950 00000 n GTb?iD$(s.BUC}l$-VNCv8Or[T(eCI@3.[@#h>pFDpxW*";h%iu5^n~s(&}F?CrN>dN*,yn$RoWl.1*F`q_&+:d!3(%9S Reports that excluded such information would be incomplete and would thus mislead users. 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