Reg Framework Flashcards
What are the criteria to qualify as a micro company under UK Law?
At least 2 of:
Turnover < 632k
Balance Sheet Total<316k
under 10 employees
What are the criteria to qualify as a micro company under UK Law?
At least 2 of:
Turnover < 632k
Balance Sheet Total<316k
under 10 employees
What are the criteria to qualify as a medium company under UK Law?
At least 2 of:
Turnover < 36m
Balance Sheet Total<18m
under 250 employees
What are the criteria to qualify as a small company under UK Law?
At least 2 of:
Turnover < 10.2m
Balance Sheet Total<5.1m
under 50 employees
What are the advantages of having accounting standards?
- Improve TRANSPARENCY of financial reporting
- Make financial information easier to UNDERSTAND, more reliable and relevant
- reduce risk of creative accounting
- make it easier to COMPARE
- improve UNIFORMITY
- improve QUALITY of reporting
What are the disadvantages of accounting reporting standards?
- standardisation does not suit all esp. if on margins
- influence of political, economic and social CULTURE is overlooked
- standards can be ARBITRARY
- remove opportunity for accountants to use judgement
- ILLUSION of precision
In the UK which companies must follow IFRS?
Listed companies, others can choose IFRS or use UK GAAP
What does IFRS stand for?
International Financial Reporting Standards
What is the IASB?
International Accounting Standards Board
UKGAAP regs can be followed in the UK by who? And what doesGAAP stand for?
Generally Accepted Accounting Principles
Any UK company except if listed.
Why is it good to have a regulatory framework?
- FLEXIBLE , quicker to respond than legislation
- GLOBAL approach ( harmonisation)
- RELIABLE presentation of financial information
- CREDIBILITY of reports if following regulations
- REGULATES behaviour of companies and directors through standards suuch as IFRS
- DEVELOPS social goals through environmental and Corp Social Responsibility reporting
- COMPATIBILITY across companies and borders
What does the conceptual framework (constitution) which provides the basis for development of and evaluation new and existing be standards set out?
- objectives of financial reporting
- underlying assumptions
- qualitative characteristics
- elements of financial statements
- concepts of capital and capital maintenance
What are the qualitative characteristics of the IASB conceptual framework?
Fundamental
- Faithful Representation ie complete, neutral and free from error
- relevant
Qualitative
- Understandability
- Vomparability
- Verifiability
- Timeliness
List 4 assumptions for preparation of accounts under the conceptual framework
- Prudence
- Going Concern Basis
- Materiality
- Neutral
List 4 advantages for having a global accounting framework?
- makes global comparison easier
- facilitates cross-border listing and raising of funds
- common accounting language
- makes appraising of foreign companies easier ie for takeover/ merger
- easier for multi-nationals to prepare group accounts
- Reduce audit costs for multi-nationals
- improve management control for multi-nationals
- easier to transfer accounting knowledge of across borders
List 4 advantages for having a global accounting framework?
- makes global comparison easier
- facilitates cross-border listing and raising of funds
- common accounting language
- makes appraising of foreign companies easier ie for takeover/ merger
- easier for multi-nationals to prepare group accounts
- Reduce audit costs for multi-nationals
- improve management control for multi-nationals
- easier to transfer accounting knowledge of across borders
List 4 disadvantages for having a global accounting framework?
- cost of implementation of IFRS
- lower level of detail compared to regulatory frameworks in some countries eg US
- requires judgement as principle based
- challenges in emerging economies
- economic environment
- incompatible legal and regulatory environment
- concern re SMEs
- level of preparedness
- quality and availability of auditors
What are the 4 levels of Carroll’s CSR pyramid?
From bottom to top
Economic - focus on profitability
Legal - compliance with law
Ethical - doing what is right
Philanthropic - doing what is desired
What are the 2 approaches to standard development to reduce global accounting differences?
Standardisation, eg Earnings per Share
Harmonisation, reconciles national differences
What are the 2 approaches to standard development to reduce global accounting differences?
Standardisation, eg Earnings per Share
Harmonisation, reconciles national differences
Name 4 barriers to global harmonisation?
Identified by Meek and Saudagaran (1990)
Legal systems Accounting Practices and business financing Tax system Level of inflation Political and economic relationships
Which regulation sets out the Presentation of Financial Statements?
IAS1
Which regulation sets out the basis for the Statement of Cash Flow?
IAS7
Which regulation covers Business Combinations?
IFRS 3
