... THE CANADIAN FINANCIAL REPORTING ENVIRONMENT Multiple Choice—Conceptual Answer No. Description d 1. Accounting characteristics. a 2. Nature of financial accounting. c 3. Definition of financial accounting. a 4. Financial reporting entity. d 5. Efficient use of resources. d 6. Capital allocation process. c 7. Assessing management stewardship. c 8. Objectives of financial reporting. a 9. Role of AcSB. c 10. Body responsible for setting GAAP. b 11. Preparation of biased information. d 12. Parties instrumental in development of reporting standards. d 13. Stakeholders in the financial reporting environment.. a 14. “Due process”. d 15. Causes of subprime lending crisis. d 16. Management bias. b 17. Adoption of IFRS. c 18. Role of OSC. d 19. Definition of GAAP. b 20. Changing nature of the economy. d 21. Exercise of professional judgement. c 22. Major factors in the reporting environment. a 23. Impact of technology on financial reporting. b 24. Nature of the “Balanced Scorecard”. a 25. Responsibility for financial statements. d 26. GAAP for private enterprises. d 27. Reporting principles b 28. SOX. a 29 AcSB’s standard setting process Exercises Item Description E1-30 Objectives of financial reporting. E1-31 Role of securities commissions and stock exchanges. E1-32 User needs. E1-33 Sources of GAAP. E1-34 Standard Setting. E1-35 Challenges facing financial reporting. E1-36 Stakeholders...
Words: 2621 - Pages: 11
...Information presented in financial statements is of critical importance to external decision mak- ers. Financial statements affect the prices paid for equity securities and interest rates attached to debt securities. To the extent that financial performance and condition are accurately com- municated to business decision makers, debt and equity securities are more accurately priced. By extension, financial reporting plays a crucial role in efficient resource allocation within and across economies. Accounting information contributes to the efficient operation of securities markets, labor markets, commodity markets, and other markets. To illustrate, imagine the consequences of a breakdown in the integrity of financial report- ing. The Enron scandal provides a case in point. At the beginning of 2001, Enron was one of the most innovative and respected companies in the United States. With revenues of over $100 billion and total company value of over $60 billion, it was the fifth largest U.S. corporation based on market value. In October 200 I, the company released its third quarter earnings report to the public. Although operating earnings were higher than in previous years, the income state- ment contained a $1 billion "special charge." Financial analysts began investigating the cause of this charge and discovered that it was linked to related-party transactions and questionable accounting practices. Once it became clear to the capital markets that Enron had not faithfully and accurately...
Words: 340 - Pages: 2
...THE ROLE OF SOCIAL AND ENVIRONMENTAL REPORTING IN THE ORGANIZATIONS Author: Mohamed Anas (2015) INTRODUCTION There has been an increase in demand for environmental and social reporting as well as other non-financial information by shareholders and users of financial statements. In early 2000’s the stakeholders and shareholders are only concerned with the financial performance but now the trend has changed as that the shareholders and stakeholders who believed that the organization should be responsible to the environment and society in which they operate the business, and therefore it needs to be good for the community. This has caused that many laws and regulations such as environmental and social laws, employment laws, anti-corruption laws and good governance laws developed by the states to protect the environment and social issues icons. The concept of social responsibility has been raised in the context of this because the organization must be committed to run the business ethically and contribute for the growth of the economy, and at the same time improving the standard of life of employees and their families as well as for the society they operate their business and future generation. REQUIREMNT OF THE CURRENT CONCEPTUAL FRAMEWORK Conceptual framework is a guideline issued by international accounting standard board (IASB) for the development of international accounting standards (IAS). It is a practical tool that assist IASB to develop standards and assist preparers...
Words: 2594 - Pages: 11
...this essay is to discuss financial reporting is both a reflection and creator of our perception of social reality and is consistently evolving. By means of research of these source collections, relevant evidence is selected, evaluated and organized into three key areas: the Carbon tax legislation represents a creation of a new social reality and the impact on sustainability in business. The carbon tax would be represented in the financial reports. To introduce the particular company and legislation impacts on that company. The Framework shows that the financial reporting is present relevant and reliable information. Some experts considered that the insufficient information on financial reporting impact on social reality. Thus, the Sustainability reporting occurs to fix up the fanatical reporting gaps. Introduction Financial reporting is both a reflection and creator of our perception of social reality and consistently evolving. Currently, accounting system is not only focus on the data of how much company earns, it also shift towards to social responsibility. As the dramatic of pollutions, especially that of the developing nations is extremely harmful not only to the surrounding environment, but also to the inhabitants of that country as well. Thus, financial reporting take concern on such problems and create out Sustainability reporting which help to reduce the pollutions. This essay is to discuss the both reflection and creator of financial reporting in reality social and...
Words: 2231 - Pages: 9
...[pic] SOUND FINANCIAL REPORTING IS A GOOD THING FOR BRINGING CONFIDENCE BACK TO THE CORPORATE WORLD Submitted By: Ahmed Shafiul Huq 801414063 Principle of Accounting (EIB505) Section: B Executive Master of Business Administration Submitted To: Mr. Mohammad Rakib Uddin Bhuiyan Assistant Professor Department of International Business Faculty of Business Studies EXECUTIVE SUMMARY A company’s financial reporting amalgamates important documents to create an effective spreadsheet to simplify the financial data of an organization. It captures much of the information that organizations prepare, publish, and use. Financial reporting plays an integral role in the capital markets and economic stability and growth, and efforts to enhance its quality are vital. A Sound Financial Reporting provides us relevant, meaningful, reliable, accurate and comprehensive reporting of management stewardship whether in the form of numbers or other operating data. It is increasingly important for businesses to be financially transparent and for governments to establish a sound regulatory environment for corporate financial reporting. Sound financial reporting can benefit business by some ways just like valuing business, easy to identify...
Words: 3507 - Pages: 15
...Why Government Accounting and Financial Reposting is - and Should be-Different. Government and Business Enterprises environments differs. The environment differences between them are organization purposes, process of generating revenue, relationship with stakeholders, budgetary obligation and potential for longevity. Due to these environmental differences the need for their accounting and financial reporting users differs too. The accounting and financial reporting standards for government and business enterprises need to focus and meet the requirements of their stakeholder’s needs. The stakeholders for the business enterprises financial reports are creditors, Equity Investors and their regulators who can use financial reports to make decision on whether to invest or not on those business and creditor whether to borrow them or not .The stakeholders for the Government are creditors and citizens who are primarily the resources provider though taxes, who need assess the government accountability in how public resources were acquired and used so as to make political, social and economic decisions. Creditors generally they look for the assurance if there will be sufficient fund to repay debt. In Business enterprises they seek the how the earnings are generated while in the government they seek information about the ability and willingness to correct taxes and generate other revenue to debt repayment. Major environmental Differences between Government and Business are described...
Words: 734 - Pages: 3
...unique legal, regulatory, litigious, social, economic, religious, and cultural environments of the countries they were created in (Wiecek and Young, 1-2). The increase in globalization coupled with related regulations has given rise to the need for a common set of global accounting standards – International Financial Reporting Standards (IFRS). Leading the charge, the International Accounting Standards Board (IASB), formerly known as the International Accounting Standards Committee, has begun a movement toward harmonization and convergence of GAAP. More than 100 countries currently use IFRS, so if your business goals include global expansion, it is critical to educate yourself about the impact of IFRS on your financial reporting processes and business now (U.S. GAAP vs. IFRS). This paper will focus specifically on the differences and similarities between IFRS and U.S. GAAP with respect to accounting for the effects of changes in foreign exchange rates. The guidance related to accounting for foreign currencies in U.S. GAAP is included in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 830, Foreign Currency Matters. In IFRS, the guidance related to accounting for foreign currency issues is contained in International Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates. Additional IFRS guidance is contained in IAS 29, Financial Reporting in Hyperinflationary Economies. Before delving too deep into the significant...
Words: 2205 - Pages: 9
...and trade. Investors can trade shares and securities worldwide. Entities are in a position to access the funds globally in the most advantageous markets. For this, investors from all over the world rely upon financial statements before taking decisions. They need to be convinced that the financial statements are true and fair and what they understand from the statements is what the person preparing them intends to convey. However, different countries adopt different accounting treatments and disclosure patterns with respect to the same economic event. This may create confusion among the users while interpreting the financial statements. Financial statements that are based on a single, universally accepted and used GAAP will enable the world to exchange financial information in a meaningful and trustworthy manner. This will accelerate the globalisation of finance. Adoption of IFRS worldwide and in India The use of International Financial Reporting Standards (IFRS) as a universal financial reporting language is gaining momentum across the globe. Several countries have implemented IFRS and converged their national GAAP to IFRS. More than 100 countries throughout the world, including the 27 European Union member states, require or permit the use of International Financial Reporting Standards (IFRSs), developed by the IASB. The number of countries adopting IFRS is expected to increase to 150 by the end of 2011. Countries such as China and Canada have announced their intention to adopt...
Words: 2877 - Pages: 12
...Relevant financial reporting standards As noted earlier, a number of existing standards and interpretations directly and indirectly deal with environmental issues. In this respect, BFRS 6 (implementation January 2007) for example directly deals with extractive industries and IFRIC 5 provides the guidance for decommissioning, rehabilitation and restoration of environment related expenditure. IFRIC 3 (still under discussion) and BAS 38 (intangibles) deal with government allocated emission rights, trades in these rights and the impairment of the emission allowances. Furthermore, it is important to note that a number of other standards provide an indirect support for the recognition, measurement and disclosure of environmental assets and liabilities. BAS 37 (provisions for contingent liabilities and assets) can be linked to environmental liabilities. BFRS 3, BAS 27, BAS 28, BAS 31, BAS 24 and BFRS 8 respectively deal with business combinations, investments in joint ventures and associates, related party disclosures, and specify the reportable segments of a geographically dispersed global company. Listed local manufacturing companies, subject to certain exemptions, are expected to comply with BFRS. An environment perspective to financial reporting standards therefore provides a new insight; an insight that is useful for monitoring and protecting the environment. The relevant standards are discussed below. Paragraph 11 of BFRS 6 states the following: “In accordance...
Words: 1119 - Pages: 5
...Part 1: The Australian Accounting Environment Chapter 1 An overview of the Australian external reporting environment Review questions 1.1 Refer to pages 6 to 25 of the text. The main bodies responsible for regulating accounting disclosure in Australia are: (i) Australian Securities and Investments Commission (ASIC) Briefly, ASIC is responsible for administering corporations legislation within Australia (which includes various reporting requirements). According to its own website, the role of the ASIC is to enforce and regulate company and financial services laws to protect consumers, investors and creditors. (ii) Australian Accounting Standards Board (AASB) The role of the AASB is to develop a conceptual framework. It is also responsible for ‘making’ accounting standards that have the force of law under the corporations legislation, as well as formulating accounting standards that are to be used by reporting entities that are not governed by corporations legislation, inclusive of entities operating in the not-for-profit sector and public sector entities. The AASB is also responsible for Interpretations Advisory Panels, user focus groups and project advisory panels. As was indicated in this chapter, however, a great deal of the responsibility for developing accounting standards to be released by the AASB is in the hands of the IASB, as is the development of the conceptual framework. It is to be anticipated that only minor...
Words: 1832 - Pages: 8
...Chapter 1 The Government and Not-For-Profit Environment Questions for Review and Discussion 1. The critical distinction between for-profit businesses and not-for-profits including governments is that businesses have profit as their main motive whereas the others have service. A primary purpose of financial reporting is to report on an entity’s accomplishments — how well it achieved its objectives. Accordingly, the financial statements of businesses measure profitability, their key objective. Financial reports of governments and other not-for-profits should not focus on profitability, since it is not a relevant objective. Ideally, therefore, they should focus on other performance objectives, such as how well the organizations met their service goals. In reality, however, the goal of reporting on how well they have achieved such goals has proven difficult to attain and the financial reports have focused mainly on financially-related data. 2. Governments and not-for-profits are “governed” by the budget, whereas businesses are governed by the marketplace. The budget is the key political and fiscal document of governments and not-for-profits. It determines how an entity obtains its resources and how it allocates them. It encapsulates most key decisions of consequence made by the organization. In a government the budget is not merely a managerial document; it is the law. 3. Owing to the significance of the budget, constituents want assurance that the entity achieves...
Words: 5520 - Pages: 23
...Chapter 1 The Canadian Financial Reporting Environment Prepared by: Dragan Stojanovic, CA Rotman School of Management, University of Toronto The Canadian Financial Reporting Environment Role of Financial Reporting • Financial statements and financial reporting • Accounting and capital allocation •Stakeholders Objective of Financial Reporting •Management bias •Users’ needs Standard Setting • Need to develop standards • Parties involved in standard setting • Standard setting in a political environment GAAP • GAAP hierarchy •Professional judgement • Role of ethics Challenges Facing Financial Reporting • Globalization of companies and capital markets • Impact of technology • Changing nature of the economy • Increased requirement for accountability 2 The Canadian Financial Reporting Environment Role of Financial Reporting • Financial statements and financial reporting • Accounting and capital allocation •Stakeholders Objective of Financial Reporting •Management bias •Users’ needs Standard Setting • Need to develop standards • Parties involved in standard setting • Standard setting in a political environment GAAP • GAAP hierarchy •Professional judgement • Role of ethics Challenges Facing Financial Reporting • Globalization of companies and capital markets • Impact of technology • Changing nature of the economy • Increased requirement for accountability 3 Characteristics of Accounting 1. Identification, measurement, and communication of financial information about; 2...
Words: 2259 - Pages: 10
...programs by unauthorized personnel; and The use of computer programs that have not been authorized. *Accounting estimate—An approximation of a monetary amount in the absence of a precise means of measurement. This term is used for an amount measured at fair value where there is estimation uncertainty, as well as for other amounts that require estimation. Where ISA 540 2 addresses only accounting estimates involving measurement at fair value, the term “fair value accounting estimates” is used. *Accounting records—The records of initial accounting entries and supporting records, such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers, journal entries and other adjustments to the financial statements that are not reflected in formal journal entries; and records such as work sheets and spreadsheets supporting cost allocations, computations, reconciliations and disclosures. Agreed-upon procedures engagement—An engagement in which an auditor is engaged to carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings. The recipients of...
Words: 10496 - Pages: 42
...had an adverse effect on the development of the accounting profession in China. B. Accounting and auditing in China have taken different paths in their development processes. Auditing firms audited mainly domestic companies, and were under the State Administration of Audit (SAA), whereas accounting firms focused on companies using foreign investments and were sponsored by the Ministry of Finance. C. Unlike in the U.K., where there was a good legislative and judicial environment during the early stages of the development of the profession, in China, a market-oriented legislative and judicial environment is still emerging. D. Unlike in the U.K., where auditors receive support from the established professional bodies, these support mechanisms are still lacking in China. II. The recent economic reform program stimulated the growth of the accounting profession in China. A. With the recognition by the State of joint stock company form, the demands for financial information from investors and other interested parties increased. B. The establishment of two stock exchanges helped rapid growth of the accounting activities. C. Various government regulations on the implementation of economic reform measures require the involvement of independent auditors. D. The laws on joint ventures with foreign companies require the audit of annual statements. E. International accounting firms were allowed to be involved in training...
Words: 6158 - Pages: 25
...Board Paper Financial Accounting Standard Board (FASB) is a private, not-for-profit organization responsible for setting accounting standard for public companies in the United States. It was created in 1973 as a replacement for the Committee on Accounting (CAP) and the Accounting Principle Board (APB). Financial Accounting Standard Board mission is stated as “to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investor and other users of financial reports.” The International Accounting Standard Board (IASB) is an independent, privately funded accounting standard-setter based out of England. It replaces the International Accounting Standard Committee and was founded April 1, 2001. International Accounting Standard Board is responsible for development and publication of International Financial Reporting Standard (IFRS). The International Accounting Standard Board mission is to converged global accounting standard; develop a single set of high quality, understandable, and enforceable global accounting standards; provide high quality transparent and comparable information in financial statement and help the world’s capital market and other financial statement user make sound economic decision. Since more companies are doing business and seeking financing from outside their home countries, investors from other countries are now reading their financial statement...
Words: 1060 - Pages: 5
