Question Tag: IFRS

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  • 15 Marks

CR – May 2021 – L3 – Q6 – Regulatory Environment for Corporate Reporting

Discuss the rationale for different regulatory frameworks and analyze sources of corporate financial reporting regulations in Nigeria.

International Financial Reporting Standards (IFRS) are sets of accounting standards, and it is unrealistic to assume that these standards could not replace those based around rules. However, where a rule-based system has been in operation, there is likely to be an expansion of ethical challenges for both accountants and auditors involved with financial statements if a principles-based approach is adopted. Therefore, regulatory authorities need to ensure ethical practices to achieve high-quality financial statements. This is drawing attention to the need for closer or greater monitoring. Apart from this fact, corporate financial reporting regulations have been in operation before the advent of IFRS.

Required:

a. Appraise the rationale behind different regulatory frameworks for corporate financial reporting. (8 Marks)

b. Analyze in detail the various sources of regulations for corporate financial reporting in Nigeria. (7 Marks)

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  • 1 Marks

AAA – Nov 2012 – L3 – AII – Q15 – Regulatory Framework and Professional Standards

Identifies a major deficiency of local standards compared to IFRS in the presentation of non-current assets.

One of the major deficiencies of our Local Standards over IFRS’s presentation of Non-current Assets is that our Local Standards do not recognise ……………. process.

 

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  • 1 Marks

AAA – Nov 2012 – L3 – SA – Q9 – Regulatory Framework and Professional Standards

Identifying an invalid statement about the benefits and use of IFRS.

Which of the statements listed below about IFRS is invalid?

A. Multinational should benefit from a number of cost savings when using IFRS
B. Companies that wish to reach a wider group of investors will find financial statements based on IFRS acceptable in all major markets
C. Using IFRS will make it easier, though more expensive, to have secondary listing in other countries of the world
D. Using the same accounting basis provides greater comparability between companies which will lead to more efficient investment
E. The original standard setter between (1973-2000) was International Accounting Standard Committee (IASC)

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  • 15 Marks

CR – Nov 2021 – L3 – Q6 – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Evaluate IFRS solutions to accounting challenges, commercial pressures, and accounting techniques under such pressures.

Directors of companies are expected to issue financial statements that present fairly the financial position, financial performance, and cashflows of their entities. Hence, financial statements are supposed to be a faithful representation of the effects of transactions and other events in accordance with the definition and recognition criteria for assets, liabilities, income, and expenses set out in IFRS. However, a fair presentation can encompass a range of different figures because alternative accounting policies can produce different results. Also, the application of accounting policies in accordance with IAS 8 is often based on estimates and judgments. Valuations and estimations are key factors in drafting financial information. Regulatory frameworks, both local and global, asserted conscious efforts to address some of these problems. However, the strength of a regulatory framework may be undermined by commercial pressures on those responsible for preparing financial statements.

Required:

a. Evaluate the ways in which IFRS has tried to alleviate the problems illustrated above.
(5 Marks)

b. Discuss FIVE likely commercial pressures on preparers of financial statements.
(5 Marks)

c. Examine TWO techniques employed by accountants to produce desired accounting results when faced with such pressures.

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  • 7 Marks

FR – Nov 2022 – L2 – Q4a – IFRS Issuance Process

Summary: Describe six steps in the issuance process of International Financial Reporting Standards (IFRS).

Describe SIX steps involved in the process of issuing International Financial Reporting Standards (IFRS). (6 Marks)

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  • 15 Marks

FR – May 2017 – L2 – SB – Q5 – Preparation of Financial Statements

Discuss distinguishing features of debt and equity presentation under IFRS and explain the impact of classification on financial statements.

The difference between debt and equity in an entity’s statement of financial position is not easily distinguishable for preparers of financial statements. Debts and equity financial instruments may have similar characteristics, which may lead to inconsistency of reporting.

Required:

  1. Discuss the main distinguishing features in the presentation of debt and equity under International Financial Reporting Standards (IFRS) with clear examples.
    (10 Marks)
  2. Explain why it is important for entities to understand the impact of the classification of a financial instrument as debt or equity in the financial statement.
    (5 Marks)

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  • 10 Marks

FR – Nov 2014 – L2 – Q4a – Presentation of Financial Statements

Explain the essential characteristics of assets and features of liabilities per IAS 1.

The International Financial Reporting Standards (IFRS) through the International Accounting Standards Board (IASB) set out the definition and essential characteristics of assets and liabilities in the presentation of financial statements, which users of the statements are likely to rely on when making major economic decisions.

Required:

Identify the essential characteristics of assets and comment on the features of liabilities in accordance with provisions of IAS 1 on the presentation of financial statements. (10 Marks)

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  • 12 Marks

FR – Nov 2019 – L2 – Q1c – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Explain the factors required for selecting and applying accounting policies per IAS 8, and identify alternative policies for inventory and depreciation.

c. State the main factors that IAS 8 requires management of a company to consider in selecting and applying accounting policies in the absence of any IFRS and identify the alternative accounting policies on the following items in the financial statements:

i. Inventories
ii. Depreciation

(12 Marks)

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  • 12 Marks

FR – Nov 2019 – L2 – Q1a – Property, Plant, and Equipment (IAS 16)

Explain the classification and measurement differences between investment properties and property, plant, and equipment.

You are the Financial Controller of Uchena Nigeria plc. The company was established about 15 years ago. At the last annual general meeting of the company, a new Managing Director was appointed.

The new Managing Director is a non-finance executive with very little knowledge of accounting. He has requested for the past five years financial statements of the company for review.

He has prepared a list of issues based on his review as follows:

  1. When I look at the statement of financial position of one of the past financial statements, one of the categories of non-current asset is investment properties and another category is property, plant, and equipment, in which all other properties are included. It is certain that the company invested in properties, so why do you have two categories for them in the statement of financial position? How did you decide what goes where?
  2. A note to the financial statements states that investment properties are measured at their fair values and not depreciated. Don’t all non-current assets have to be depreciated over their estimated useful lives?
  3. Another note to the financial statements states that property included in the property, plant, and equipment is measured at cost less accumulated depreciation rather than at fair value. Shouldn’t all properties be measured in financial statements on a consistent basis?
  4. Finally, I can’t see from the financial statements where gains or losses relating to the measurement of investment properties are included; the profit statement includes two main components: profit or loss and other comprehensive income; where would the gains or losses go? Presumably, the treatment of gains or losses is the same for any non-current assets, which one is measured at fair value?

Required:

Provide answers to the issues raised by the Managing Director. You should justify your answers with reference to the relevant IFRS. (12 Marks)

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  • 3 Marks

FR – Nov 2020 – L2 – Q5b – Regulatory Framework for Financial Reporting

Highlight the three basic steps necessary for developing a new accounting standard.

International Financial Reporting Standards (IFRS) may either be premised on principle-based or rule-based concepts.

Required:

Highlight the three basic steps/processes necessary for developing a new accounting standard.

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  • 15 Marks

CR – May 2021 – L3 – Q6 – Regulatory Environment for Corporate Reporting

Discuss the rationale for different regulatory frameworks and analyze sources of corporate financial reporting regulations in Nigeria.

International Financial Reporting Standards (IFRS) are sets of accounting standards, and it is unrealistic to assume that these standards could not replace those based around rules. However, where a rule-based system has been in operation, there is likely to be an expansion of ethical challenges for both accountants and auditors involved with financial statements if a principles-based approach is adopted. Therefore, regulatory authorities need to ensure ethical practices to achieve high-quality financial statements. This is drawing attention to the need for closer or greater monitoring. Apart from this fact, corporate financial reporting regulations have been in operation before the advent of IFRS.

Required:

a. Appraise the rationale behind different regulatory frameworks for corporate financial reporting. (8 Marks)

b. Analyze in detail the various sources of regulations for corporate financial reporting in Nigeria. (7 Marks)

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  • 1 Marks

AAA – Nov 2012 – L3 – AII – Q15 – Regulatory Framework and Professional Standards

Identifies a major deficiency of local standards compared to IFRS in the presentation of non-current assets.

One of the major deficiencies of our Local Standards over IFRS’s presentation of Non-current Assets is that our Local Standards do not recognise ……………. process.

 

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  • 1 Marks

AAA – Nov 2012 – L3 – SA – Q9 – Regulatory Framework and Professional Standards

Identifying an invalid statement about the benefits and use of IFRS.

Which of the statements listed below about IFRS is invalid?

A. Multinational should benefit from a number of cost savings when using IFRS
B. Companies that wish to reach a wider group of investors will find financial statements based on IFRS acceptable in all major markets
C. Using IFRS will make it easier, though more expensive, to have secondary listing in other countries of the world
D. Using the same accounting basis provides greater comparability between companies which will lead to more efficient investment
E. The original standard setter between (1973-2000) was International Accounting Standard Committee (IASC)

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  • 15 Marks

CR – Nov 2021 – L3 – Q6 – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Evaluate IFRS solutions to accounting challenges, commercial pressures, and accounting techniques under such pressures.

Directors of companies are expected to issue financial statements that present fairly the financial position, financial performance, and cashflows of their entities. Hence, financial statements are supposed to be a faithful representation of the effects of transactions and other events in accordance with the definition and recognition criteria for assets, liabilities, income, and expenses set out in IFRS. However, a fair presentation can encompass a range of different figures because alternative accounting policies can produce different results. Also, the application of accounting policies in accordance with IAS 8 is often based on estimates and judgments. Valuations and estimations are key factors in drafting financial information. Regulatory frameworks, both local and global, asserted conscious efforts to address some of these problems. However, the strength of a regulatory framework may be undermined by commercial pressures on those responsible for preparing financial statements.

Required:

a. Evaluate the ways in which IFRS has tried to alleviate the problems illustrated above.
(5 Marks)

b. Discuss FIVE likely commercial pressures on preparers of financial statements.
(5 Marks)

c. Examine TWO techniques employed by accountants to produce desired accounting results when faced with such pressures.

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  • 7 Marks

FR – Nov 2022 – L2 – Q4a – IFRS Issuance Process

Summary: Describe six steps in the issuance process of International Financial Reporting Standards (IFRS).

Describe SIX steps involved in the process of issuing International Financial Reporting Standards (IFRS). (6 Marks)

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  • 15 Marks

FR – May 2017 – L2 – SB – Q5 – Preparation of Financial Statements

Discuss distinguishing features of debt and equity presentation under IFRS and explain the impact of classification on financial statements.

The difference between debt and equity in an entity’s statement of financial position is not easily distinguishable for preparers of financial statements. Debts and equity financial instruments may have similar characteristics, which may lead to inconsistency of reporting.

Required:

  1. Discuss the main distinguishing features in the presentation of debt and equity under International Financial Reporting Standards (IFRS) with clear examples.
    (10 Marks)
  2. Explain why it is important for entities to understand the impact of the classification of a financial instrument as debt or equity in the financial statement.
    (5 Marks)

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  • 10 Marks

FR – Nov 2014 – L2 – Q4a – Presentation of Financial Statements

Explain the essential characteristics of assets and features of liabilities per IAS 1.

The International Financial Reporting Standards (IFRS) through the International Accounting Standards Board (IASB) set out the definition and essential characteristics of assets and liabilities in the presentation of financial statements, which users of the statements are likely to rely on when making major economic decisions.

Required:

Identify the essential characteristics of assets and comment on the features of liabilities in accordance with provisions of IAS 1 on the presentation of financial statements. (10 Marks)

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  • 12 Marks

FR – Nov 2019 – L2 – Q1c – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Explain the factors required for selecting and applying accounting policies per IAS 8, and identify alternative policies for inventory and depreciation.

c. State the main factors that IAS 8 requires management of a company to consider in selecting and applying accounting policies in the absence of any IFRS and identify the alternative accounting policies on the following items in the financial statements:

i. Inventories
ii. Depreciation

(12 Marks)

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  • 12 Marks

FR – Nov 2019 – L2 – Q1a – Property, Plant, and Equipment (IAS 16)

Explain the classification and measurement differences between investment properties and property, plant, and equipment.

You are the Financial Controller of Uchena Nigeria plc. The company was established about 15 years ago. At the last annual general meeting of the company, a new Managing Director was appointed.

The new Managing Director is a non-finance executive with very little knowledge of accounting. He has requested for the past five years financial statements of the company for review.

He has prepared a list of issues based on his review as follows:

  1. When I look at the statement of financial position of one of the past financial statements, one of the categories of non-current asset is investment properties and another category is property, plant, and equipment, in which all other properties are included. It is certain that the company invested in properties, so why do you have two categories for them in the statement of financial position? How did you decide what goes where?
  2. A note to the financial statements states that investment properties are measured at their fair values and not depreciated. Don’t all non-current assets have to be depreciated over their estimated useful lives?
  3. Another note to the financial statements states that property included in the property, plant, and equipment is measured at cost less accumulated depreciation rather than at fair value. Shouldn’t all properties be measured in financial statements on a consistent basis?
  4. Finally, I can’t see from the financial statements where gains or losses relating to the measurement of investment properties are included; the profit statement includes two main components: profit or loss and other comprehensive income; where would the gains or losses go? Presumably, the treatment of gains or losses is the same for any non-current assets, which one is measured at fair value?

Required:

Provide answers to the issues raised by the Managing Director. You should justify your answers with reference to the relevant IFRS. (12 Marks)

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  • 3 Marks

FR – Nov 2020 – L2 – Q5b – Regulatory Framework for Financial Reporting

Highlight the three basic steps necessary for developing a new accounting standard.

International Financial Reporting Standards (IFRS) may either be premised on principle-based or rule-based concepts.

Required:

Highlight the three basic steps/processes necessary for developing a new accounting standard.

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