Accounting Policies Flashcards
What is the standard governing accounting policies?
IAS 8 - Accounting Policies, Changes in Accounting Estimates & Errors
What is a key concept of accounting policies?
Policies must reflect a standard where standard specifically applies to the transaction or event
If the transaction lies outside, then should follow the conceptual framework and following policy for similar transaction or events
?What would lead to a change in accounting policies
Required by a standard or change provides truer and more relevant view
What to do if the accounting standard and industry best practice are at odds with one another?
Ignore best practice
How do we measure environmental impact?
Targets and performance reviews
Why do companies use environmental reports?
Public image
It motivates employees to look for efficiencies
It may encourage investment
What is the problem with environmental reporting?
As it’s voluntary and not guided by a standard, it lacks consistency across companies and could be used as a marketing tool - only telling the good and not the bad
What is integrated reporting?
Explains how a company creates value over time
Sets out how the organisations strategy, organisation, governance and prospects leads to value creation.
What are the six capitals of integrated reporting?
Social Human Intellectual Natural Financial Manufactured
What should integrated reporting be?
Concise
Complete
Reliable
Free from Material Error
What is integrated reporting out to achieve?
Provides a more holistic view of the business away from the financials; business-led rather than compliance-led which is a tick the box approach without meaning
What are the benefits of integrated reporting
Forward looking
Disclosure of previously undisclosed increases understanding of the business
Opportunity to tell a story beyond limitations of financials
Long term harmonisation roadmap
Fair Value
Leases
Earnings per share
Conceptual framework
Benefits of convergence
Comparison of international companies
Encourages investment to Worldwide financiers
Easier to collect tax
Barriers to convergence
Different legal systems
Nationalism
Different jurisdictions place greater attention on different areas
Lack of local leadership to drive change
Circumstances - War, Sanctions <> Priority for Convergence
