Slide One Afs Bba

8/6/2019 Slide One Afs Bba

1/12

The financial reporting framwork

Learning Outcomes:

1. What is IFRS2. Understand general purpose of financial reporting

standard

3. Discuss IAS and IFRS in the context if financial

statements


2/12

International financial reporting

standard International Financial Reporting Standards (IFRS) are principles basedStandards, Interpretations and the Framework adopted by the International

accounting standard board (IASB).

Many of the standards forming part of IFRS are known by the older name

of International Accounting Standards.

IFRS are considered a "principles based" set of standards in that they

establish broad rules as well as dictating specific treatments.


3/12

A general purpose of financial

reporting standard A general purpose financial report is a financial report prepared and presented at least annually and is directed toward the common

information needs of a wide range of users. (IASB F-7).

Objective of general purpose financial reporting:

Investors and their advisers

Employees

Lenders

Suppliers and other trade creditors

Customers Government and their agencies

The public, including group such as the media and special interest group

like Greenpeace.


4/12

Definition and recognition of

elements of financial statments Assets Liabilities

Expenses

Income

Revenue

The interrelationship between income, revenue and gains


5/12

Key concept

Going concern: The financial statements are prepared on the basis that the

entity will continue to operate into the foreseeable future. If the entity

intends or needs to liquidate then the financial statements may have to be

prepared on a different basis.

Accrual accounting: The method of accounting whereby revenues and

expenses are identified within a specified period of time and are recorded

as incurred, along with acquired assets, without regard to the date to

receipt or payment of cash.


6/12

Big 4 Audit firms

PricewaterhouseCoopers

Deloitte Touche Tohmatsu

Ernst & Young

KPMG


7/12

Presentation of financial

statements (IAS1) The main objective of the International Accounting StandardsBoard in revising IAS 1 was to aggregate information in the

financial statements on the basis of shared characteristics. With

this in mind, the Board considered it useful to separate changes in

equity (net assets) of an entity during a period arising from

transactions with owners in their capacity as owners from otherchanges in equity. Consequently, the Board decided that all

owner changes in equity should be presented in the statement of

changes in equity, separately from non-owner changes in equity.


8/12

Statement of Cash Flow (IAS7)

Information about the cash flows of an entity is useful in providing users of

financial statements with a basis to assess the ability of the entity to

generate cash and cash equivalents and the needs of the entity to utilise

those cash flows. The economic decisions that are taken by users require an

evaluation of the ability of an entity to generate cash and cash equivalentsand the timing and certainty of their generation.

The objective of this Standard is to require the provision of information

about the historical changes in cash and cash equivalents of an entity by

means of a statement of cash flows which classifies cash flows during theperiod from operating, investing and financing activities.


9/12

Financial Instruments: Disclosures

(IFRS7) The International Accounting Standards Board believes that users of

financial statements need information about an entitys exposure to risks

and how those risks are managed. Such information can influence a users

assessment of the financial position and financial performance of an entity

or of the amount, timing and uncertainty of its future cash flows. Greater

transparency regarding those risks allows users to make more informed

judgements about risk and return.


10/12

Case studies/Research links/Study

questionsCasesComprehensive income

Annual financial report 30 June 2010 from KPMG

IFRS Handbook Notes

Research links

http://en.wikipedia.org/wiki/Comprehensive_income

http://www.kpmg.com/AU/en/IssuesAndInsights/Articles Publications/Example

-Financial-Statements/Documents/Example-Managed-Investment-

Scheme-30-June-2010-Annual-Financial-Report.pdf


11/12

Study questions

1. What is the IFRS?

2. Explain IFRS7?


12/12

Activity for students

Evaluate IFRS 7 RiskManagement Disclosures?