Professional Documents
Culture Documents
Reporting
Introductions
Course outline
Accounting standards in Canada
Objectives of financial reporting
External-User objectives
Preparer motivations
Required financial statements
Competency areas
Case writing review Farmer John
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Introductions
Accounting Standards
IASB (International Actg Standards
Board)
AcSB (Accounting Standards Board)
Publicly accountable enterprise
Public companies
Primary fiduciary capacity (e.g. bank)
IFRS required
Private enterprises
IFRS or ASPE or disclosed basis actg
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CICA Handbook
o Part I International Financial Reporting
Standards
o Part II Accounting Standards for Private
Enterprises
unless elect to use IFRS
REPORTING FRAMEWORKS
PUBLIC
General Purpose
IFRS
Other
Special Report
(i.e. DBA)
PRIVATE
General Purpose
IFRS
General Purpose
ASPE
Other
Special Report
(i.e. DBA)
Private Enterprises
Reasons may want to use IFRS:
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Comparability
Financial reporting impacted national
environment and cultural practices
Many countries base income tax on
reported earnings
Sweden social responsibility
Germany emphasis creditor protection
Many countries employee protection
Muslim practices no lending arrangement
Consolidated f/s Japan no parent
Objectives of Financial
Reporting
Purpose financial statements
communicate information to users
Conflict between prepares and users
Accountants make judgements:
Determine recognition
Choose measurement methods
Make suitable estimates
Decide disclosure
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Decisions of Users
Examples:
Lenders evaluate cash flows assess ability
service loan
Income tax authorities
Employees evaluate ability increase wages
Shareholders evaluate performance
Security analysts evaluate performance
Grant agencies evaluate financial need
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Financial Reporting
General purpose financial reporting
Objective financial statements useful
wide range users economic decisions
Investors take priority
Ethical issues
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Management Considerations
Impacts financial reporting objectives
First consider:
Analysis must be
Facts
Constraints
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Preparer Motivations
Earnings Management
Income smoothing
Maximizing earnings
Minimizing earnings
Big bath
Minimum Compliance
Expanded Disclosure
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Conflicting Objectives
Must prioritize where choice
Use professional judgment
Ethics is key!
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Competency Areas
Enabling Competencies
Technical Competencies
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Competency Areas
Enabling Competencies
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Competency Areas
Technical Competencies
Financial Reporting
Strategy and Governance
Management Accounting
Audit and Assurance
Finance
Taxation
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Accounting advisor
Business Advisor
Auditor
Arbitrator
CEO
Other
Comments made need to be
appropriate for reader of report.
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Case Review-Reviewing
Existing Accounting Policies
Overview
Constraints GAAP or not, if private IFRS
or ASPE if GAAP constraint, covenants
Biases and influences on decision making
Analysis of Issues
Review existing policy to see if GAAP (if
GAAP constraint)
Consider other valid alternatives
Recommendations
Current policy appropriate or need change,
tied to impact on bias and financial
statement
Consider ethics
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Overview
Constraints GAAP or not, if private IFRS or
ASPE if GAAP constraint, covenants
Users and objectives identify conflicts and
conclude on most important user and why
Analysis of Issues
Review alternatives based on facts
Recommendations
Select policy and consider impact primary user
and objective / constraints and financial
statement
Consider ethics
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Farmer John
Spend ten minutes reading through
the case
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COMPETENCY BASED
MARKING
Assessment guide attached to each case
assignments, midterm
Range NA to HC
NA not addressed
NC nominally competent
RC reaching competent
C competent
HC highly competent
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COMPETENCY BASED
MARKING
Example
Small issue e.g. contingency, subsequent
event - 2 marks total
NA = 0
NC = mark
RC = 1 mark
C = 1 marks
HC = 2 marks
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COMPETENCY BASED
MARKING
Example
Large issue e.g. Calculations / lots
alternatives - 8 marks total
NA = 0
NC = 2 marks
RC = 4 marks
C = 6 marks
HC = 8 marks
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COMPETENCY BASED
MARKING
Important to rank issues and
budget your time small, medium,
large issue since number of
available marks will be different
Marks for setting the stage overview, recommendations,
communication skills (enabling
competencies)
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