Advanced financial accounting - Lecture 25: IASB frame-work

Advanced Financial
Accounting
FIN-611
Mian Ahmad Farhan
Lecture-25
IASB Frame-work


IASB Frame-work


International Accounting Standard Board


Financial Statements
1.

Balance sheet

2.

Income statement

3.

Statement of changes in equity

4.

Cash-flow statement

5.

Notes


Financial Statements
Balance sheet
Financial position
Income statement
Financial performance
Statement of changes in equity
Movement In different heads of owner’s equity
Cash-flow statement
Movement in cash inflow and cash outflow
Notes
Significant accounting policies and explanatory notes


Qualitative Characteristics of Financial
Statements


Going concern
The entity will continue its operations for the foreseeable
future and there is no intention to liquidate or significantly
curtail its operations.


Accrual base
Incomes and expenditures are not measured at

the
amount of cash received or paid during the year
but for incomes the measurement bases are
earning and for expenses measurement bases
are incurrence. These are recorded in the
accounting record and reported in the financial
statement for the period to which they relate.


Materiality
Information is material when its omission or misstatement
could change the decisions of users.


Qualitative Check
Materiality
1.
2.
3.
4.

Relevancy
Reliability
Comparability
Understanding

Qualitative characteristics that
make financial information useful
Qualitative characteristics that
make financial presentation useful

Relevancy
The financial statement are relevant for decision making
Purpose for the use of financial statement.
Values to be relevant
1. Predictive value
2. Confirmative value


Reliability
How much faithfully the financial statement representing
the transaction.


Five Characteristics of Reliability
1.
2.
3.
4.
5.

Faithful representation
Substance over form
Neutralability
Prudence
Completeness


Constraints / Limitations relating to Relevancy &

Reliability
1. Timeliness
2. Balance between the benefit and cost
3. Balance among the different characteristics