- 10 Marks
PSAF – Nov 2023 – L2 – Q1b -General purpose financial reporting framework
Analyze the impact of specific financial reporting scenarios on qualitative characteristics of financial statements.
Question
The following revelations were made about the financial reporting process of a covered entity:
i) The users of the financial statements of the entity is less interested in the financial information because it does not provide information that enables the users to either confirm their expectation or make predictions.
ii) Equipment purchased during the year was recognized as an expense in the statement of financial performance, even though the entity applies the accrual principles.
iii) A revenue transaction of a significant value was completely omitted from the financial statement of the entity unintentionally.
iv) The financial statements showed the budget amounts alongside the actual amounts of the year in the Statement of Financial Performance.
v) The Accountant confirmed that some records relating to expenses were done based on WhatsApp messages (online texting app) from the Principal Spending Officer.
Required: Explain how each of the transactions (i) to (v) would affect a specific qualitative characteristic of the financial statements of the entity. (10 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Application, Financial Reporting, Public Sector, Qualitative Characteristics
- Level: Level 2
- Topic: General purpose financial reporting framework
- Series: NOV 2023