,

( Accounting
Standard Board)
,

,




( Opinion) ,
(Users)



,
( NAS)
,



?
?






( Definitions),
(Recognition), (Measurement )

Lets discuss:
As an auditor, do you have any concerns if:
The company did not include Accounting
policy in its financial statement?
The notes to accounts mentions: Stock
is as certified by the management.
Statement of Changes in Equity has not
been prepared.
The company prepared Accounting
Policy, but did not prepare notes to
accounts.


( Investor)
( Employee)
( Creditors)
( Buyers)
( Government and
its entities)
( Public)
( Donors)

10


-Going Concern_

-Accrual_

 -Going Concern_
,

(Understandability)
( Relevance)
( Materiality)
( Reliability)

Qualitative Characteristics of financial

statements

( Faithful representation)
Substance over form
( Neutrality)
( Prudence)
( Completeness)

( Comparability)


;Dkltsf] n]vfs+g -Recognition of
Assets_
(Inflow) ,

-Recognition of
Liabilities_
(Outflow)
,

 -Recognition of
Income_



-Recognition of
Expenses_

/
( )

/
Material items
(presented separately in
the financial statements.)
Immaterial items

Offsetting

Presentation of comparative information

(Net
Assets) (Equity)





.

Lets take a quiz

Quiz Source- www.ifrs.org

Question 1: The purpose of the

Conceptual Framework for
Financial
Reporting
a. to assist
the IASBis:
in setting
IFRSs?
b. to assist preparers of
financial statements in
applying IFRSs?
c. to assist auditors in forming
an opinion on whether
financial statements comply
with IFRSs?
d. to assist users of financial
statements in interpreting

Question 2: The objective of

general purpose financial
reporting
a. provideis:
financial information
about the reporting entity that
is useful to existing and
potential investors, lenders and
other creditors in making
decisions about providing
resources to the entity?
b. to inform government
statistics?
c. to support the entitys tax
return?
d. to meet all the information
needs of all the users of an
entitys financial statements?

Question 3: Which of the following 28

could most closely be associated with
the objective of financial reporting:

a. have a bias toward

understating assets and
income and overstating
liabilities and expenses?
b. transparency and neutrality?
c. financial stability through
conservatism/prudence?
d. management discretion in
reporting financial
information?

29

Question 4: The fundamental

qualitative characteristics are:
a. comparability and relevance?
b. relevance and reliability?
c. relevance, reliability and
comparability?
d. relevance and faithful
representation?
e. comparability and faithful
representation?

Question 5: which statement/s are true?

30

a. Relevance is a fundamental
qualitative characteristic.
b. Financial information without both
relevance and faithful
representation is not useful.
c. Financial information without both
relevance and faithful
representation cannot be made
useful by being more comparable,
verifiable, timely or
understandable.
d. Financial information that is
relevant and faithfully represented
may still be useful even if it does

31
Question 6: Expenses are
recognised in comprehensive
income (profit or OCI):
a. using the matching basison
the basis of a direct
association between the costs
incurred and the earning of
specific items of income?
b. using the accrual basisitems
are recognised as assets,
liabilities, equity, income or
expenses when they satisfy
the definitions and
recognition criteria for those
items?

32
Question 6: Expenses are
recognised in comprehensive
income (profit or OCI):
a. using the matching basison
the basis of a direct
association between the costs
incurred and the earning of
specific items of income?
b. using the accrual basisitems
are recognised as assets,
liabilities, equity, income or
expenses when they satisfy
the definitions and
recognition criteria for those
items?

33

Question 7: Recognition criteria determine

when to recognise an item.
Measurement is determining the monetary
amounts at which to measure an item.
Uncertainties about the extent of future
cash flows:

a. only affect the decision about

whether to recognise?
b. only affect the estimation of
the amount at which to
measure the item?
c. could affect both recognition
and measurement?

Question 8: How many

34
measurement bases does IFRSs
specify for the measurement of
assets?
a. onehistorical cost
b. onefair value
c. twohistorical cost and fair
value
d. manyincluding historical
cost, fair value, value in use,
estimated selling price less
costs to complete and sell,

Question 9: the Conceptual

Framework:
a.
is an IFRS?
b. overrides all other IFRS
requirements?
c. does not define standards for
any particular measurement or
disclosure issue?
d. is in the hierarchy that
management must in the
absence of a specific IFRS
requirement apply in
developing an accounting policy

Material Sources:
www.ifrs.org
www.wiley.com
www.iasplus.com