Week 1 -

Question 1

What is the Tier 1 reporting requirements?

Answer 1

Demands full application of all standards and interpretations.

Question 2

What is the Tier 2 reporting requirements?

Answer 2

Less disclosure is allowed by applicable entities.

Question 3

Tier 1 applies to who?

Answer 3

• For-profit private sector entities that have public accountability
• Australian government and state, territory and local governments.

Question 4

Tier 2 applies to who?

Answer 4

• For-profit private sector entities that do not have public accountability
• Not-for-profit sector entities
• Public sector entities other than Australian government and state, territory, and local governments.

Question 5

When does an entity have public accountability?

Answer 5

• If trading of their debt or equity instruments happens in a public market. Or it is preparing to issue these instruments in the public market.
• Assets are held by the entity in a fiduciary capacity for a broad group of outsiders as one of its main businesses.

Question 6

What is a disclosing entity?

Answer 6

With some exceptions, it’s entities who list their securities on a securities exchange.

Question 7

What is a public company?

Answer 7

Those companies who have their investments open to the public.

Question 8

What is a proprietary company?

Answer 8

Private company, i.e. investments are not open to the public.

Question 9

What is a registered scheme?

Answer 9

A managed investment scheme that is registered under 601EB of the Corporations Act.

Question 10

What is the conceptual framework?

Answer 10

Prescribes the nature, function and limits of financial reporting.

Question 11

What is the purpose of the conceptual framework?

Answer 11

• Helps preparers handle issues that is not outlined in the standards.
• Guide on how to interpret statements for all parties.
• Helps with standard consistency.

Question 12

What are the two types of characteristics of financial reporting identified in the Conceptual Framework?

Answer 12

• Fundamental: relevance and faithful representation
• Enhancing/Qualitative: timeliness, comparability, verifiability and understandability.

Question 13

What is relevance?

Answer 13

Information that has the ability to make a difference whether the users use it or not.

Question 14

What is faithful representation?

Answer 14

When the economic phenomenon is represented entirely, neutrally and with no material error.

Question 15

What is comparability?

Answer 15

Allows users to compare differences and similarities with other economic phenomena.

Question 16

Verifiability

Answer 16

Assures users that the economic phenomena’s information represented is faithfully represented.

Question 17

What is timeliness?

Answer 17

Providing information to users prior to when its ability to influence decisions diminishes.

Question 18

What is understandability?

Answer 18

Enables users to comprehend its meanings.