ACCA F7 PAST QUESTIONS

F7 2008

AN OVERVIEW OF IFRSs/IASs

 IFRS : IFRS is International Financial Reporting Accounting Standard

Definition : IFRS refers to the entire body of IASB pronouncements including standards and Interpretations approved by the IASB and IAS and SIC Interpretations approved by the predecessor, international Accounting Standard Committee  (IASC). 

The definition clearly shows that, IFRSs/IASs are SIMPLY PRONOUNCEMENTS (which are named as Standards and interpretations) made and approved by International Accounting standards Board (IASB). This is the new name of the regulatory authority. it was formerly known as International Accounting Standard committee ( IASC). Then, the accounting standards approved were called  INTERNATIONAL ACCOUNTING STANDARDS ( IASs). Some of these IASs are still very relevant till today while some have been superseded. Forty one IASs were issued by IASC, although, some have been replaced by other IASs. examples of IASs that are no longer in existence or replaced by other IASs include IAS 3, IAS 4, IAS 5, IAS 6 etc.

New Accounting standards developed and issued by IASB are called IFRSs. so, if any new standard is issued today, it will be called IFRS. There are fifteen IFRSs in issue. The current list of Relevant IASs and IFRSs will be listed below shortly.

REMINDER!

• IFRSs refers to the new numbered series of pronouncements issued by IASB
• It is distinct from IASs series issued by IASB's predecessor, IASC but both are referred to as Accounting Standards
• IFRSs are developed and issued by IASB while IASs were developed and issued by IASC.

CURRENT LIST OF IFRSs/IASs

IAS 1 - Presentation of Financial statements

IAS 2 - Inventories

IAS 7 - Statement of Cash flows

IAS 8 - Accounting policies, change in Accounting in accounting estimates and Errors

IAS 10 - Events after the reporting period

IAS 11 - Construction contracts

IAS 12 - Income Tax

IAS 16 - Property, Plant and Equipment

IAS 17 - Leases

IAS 18 - Revenues

IAS 19 - Employee benefit

IAS 20 -  Accounting for Government grant and disclosure

IAS 21 -  The effect of change in foreign exchange

IAS 23 - Borrowing cost

IAS 24 - Related party disclosure

IAS 26 - Accounting and Reporting by retirement benefit plan

IAS 27 - Separate financial statement

IAS 28 - Investment in Associates

IAS 29 - Financial reporting in hyper inflationary economies

IAS 30 - Disclosure in the financial statement of banks and similar financial institution

IAS 31 - Interest in joint venture

IAS 32 - Financial Instrument presentation

IAS 33 - Earning per share

IAS 34 - Interim financial reporting

IAS 36 - Impairment of Assets

IAS 37 - Provision, contingent liabilities and contingent  assets

IAS 38 - Intangible assets

IAS 39 - Financial instrument recognition and measurement

IAS 40 - Investment Property

IAS 41 - Agriculture

IFRS 1 - First time adoption of international financial reporting standard

IFRS 2 - Share based payment

IFRS 3 - Business combination

IFRS 4 - Insurance contracts

IFRS 5 - Non current asset for sale and discontinued operation

IFRS 6 - Exploration for and evaluation of mineral resources

IFRS 7 - Financial instrument disclosure

IFRS 8 - Operating segments

IFRS 9 - Financial instruments

IFRS 10 - Consolidated financial statements

IFRS 11 - Joint arrangements

IFRS 12 - Disclosure of interest in other entities

IFRS 13 - Fair value measurement

IFRS 14 - Regulatory Deferral Account

IFRS 15 - Revenue from contracts with customers

 REGULATORY BODY

 The body responsible for the development and re-appraisal of accounting standard is the International Accounting Standard Board (IASB). This is achieved through the conceptual framework of the board ( to be discussed later).

             IFRS in Broader Term

  According to the standard IFRS is defined as comprising:

Ø International financial reporting standard

 Ø International Accounting Standard 

Ø FRIC Interpretation 

Ø SIC Interpretation

  DEVELOPMENT OF IFRS

  The development of new standard and amendment to existing standard require a rigorous open due process. The due process steps involve :

1. A Research program –

 This is also known as origination stage. The research program involves the analysis of possible financial reporting problems by collecting evidence of the nature and extent of the perceived shortcoming and assessing potential ways to improve financial reporting

Ø At this stage there is a publication of discussion document (e.g Discussion paper, request for information, research paper) to elicit comments from interested parties that can help IASB.

Ø Active participation of national accounting standard setting bodies and regional bodies associated with accounting standard setting and other interested parties is required

through the Accounting Standard Advisory Forum (ASAF)

2. DEVELOPING A PROPOSAL FOR PUBLICATION:

Ø After a project has been formally added to IASB’s agenda then there will be a development of exposure draft

Ø The ED is normally issued for public consultation and it is opened for public comment for 90 days. In exceptional cases proposal may be issued with a common period of 60 days

Ø Draft IFRS Interpretation are exposed for a 60 days comment period

  3. REDELIBERATION AND FINALIZATION  –

Ø Following the receipt and reviews of comments the IASB would issue final IFRS. However in some cases IASB may decide to re- expose proposal before proceeding to a finalized pronouncement.

Ø The publication of an IFRS requires a super majority of IASB members by way of ballot. It requires 9 out of 15 or fewer member or 10 out of 16 members

4. POST IMPLEMENTATION REVIEW:

        The IASB must conduct a post implementation review of each new standard or major amendment usually after they have been applied for around 2 years

                COMPLIANCE WITH IFRS

An entity whose financial statement comply with IFRS shall make an explicit and unreserved statement of such compliance in the NOTES. Compliance with ALL THE REQUIREMENT OF IFRS is required before disclosure.