...FASB/IASB - “Financial Statement Presentation Project” The objective of project– The objective of the financial statement presentation project is to establish a global standard that will guide the organization and presentation of information in the financial statements. Nowadays, the globalization of financial markets is increasing dramatically. In order to assist investors, creditors, and other financial statement users to better understand the entity’s financial situation and to help users in their decision-making , it is necessary for the financial statements to be state on a common accounting framework. The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are working on converging U.S. Generally Accepted Principles (US GAAP) and International Financial Reporting Standards (IFRS). The goal of the “Financial Statement Presentation Project” is to consolidate the presentation of basic financial statements and format presented by a business entity, including the classification and display of line items and the aggregation of line items into subtotals. The following sections will outline the important changes in the new presentation for four major statements and finally arrive at a conclusion of the establishing of a new, common and high-quality standard presentation. structure of financial statement The complete set of financial statement in the project includes following statement: statement of financial position (balance...
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...A comparative studies of consolidated financials Table of Contents: 1. A. Description of Expanded accounting equation for Hal Burton Web consulting for the period of 1-30, 2015 B. Basic and consolidated financial statements of Hal Burton Web consulting for the period of 1-30, 2015 1. Income Statement. 2. Statement of financial position 3. Statement of owner’s equity 4. Statement of Cash Flows. 2. A. Requirements of International Accounting Standards (IAS-1) and its comparison with US-GAAP for the presentation of financial statements. B. Supporting examples of financial statements prepared under IFRS and US GAAP References. 1) A. Analyze and summarize the below transactions using the accounting equation in the form of a table showing different assets, liabilities, capital, revenue and expenses. Table 1. Expanded Accounting Information | | | |Hal Burton Web | | | | |Consulting | | | Statement of Owners Equity | | | | ...
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...The Fair Presentation Requirements of International Accounting Standard 1 will Undermine the UK’s View of True and Fair During the last 20/30 years there has been an increase in trade and communication. It is easier for people to do business across the world as the new technology allows this to be possible. The problem with this is that different countries have different ways of accounting standards, and therefore there is a problem on how to account standards. Hence, during the last years the debate on whether to use Fair presentation or the True and fair View is becoming a major concern. Fair presentation and the true and fair concept may seem as a similar concept, however, they do differ as well. While the former is the concept for United States, the latter is used in the UK, EU, Singapore, Australia and New Zealand. The IASB job is to prepare a “high quality global accounting standard that requires transparent and comparable information in general purposes financial statements”. According to the International Accounting Standard Board (IASB) the fair presentation is the concept which should be used, while the UK’s company act believe it’s the true and fair view ( TFV). The latest version of International accounting standard (IAS1) was brought into action from July 1998. This adopted both concepts, and it “required fair presentation and disclosure of compliance with IAS and a limited true and fair view override if compliance is misleading” . Fair presentation comes from...
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...A Little Bit of History The International Accounting Standard number 7 – Statement of Cash Flows (IAS7 or the standard) is the current authority issued by the International Accounting Standards Board (IASB) requiring the preparation and presentation of a Statement of Cash Flows, providing through it the historical changes in cash and cash equivalents of an entity. The standard was first issued in 1977 as IAS 7 – Statement of Changes in Financial Position by the International Accounting Standards Committee (IASC); subsequently, it was reissued in 1992 as IAS 7 – Cash Flow Statements. The updated standard was adopted by the IASB in 2001. Its name was changed to IAS 7 - Statement of Cash Flows in 2007 as a result of changes in terminology deriving from requirements in IAS 1 – Presentation of Financial Statements. Moreover, the issuance of new standards such as IFRS 10 – Consolidated Financial Statements, triggered minor amendments to IAS 7. Key differences between U.S. GAAP ASC 230 and IAS 7 The following table summarizes the main differences between the two standards. Subject | U.S. GAAP | IFRSs | Definition of cash and cash equivalents | Cash and short-term, highly liquid investments with maturities of generally 3 months or less are included. Bank overdrafts are not included. Restricted cash is not included. | Cash and short-term, highly liquid investments with maturities of generally 3 months or less are included. Bank overdrafts are included provided certain conditions...
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...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...
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...Prospective Financial Information Definition “Prospective financial information” means information about future financial performance, future financial position, future cash flows, and future movements in equity based on assumptions about future events and courses of action. Prospective financial information includes prospective financial statements, the notes to the prospective financial statements, and any narrative relating directly to the prospective financial statements. Philippine Standard on Assurance Engagements (PSAE) 3400 (previously PSA 810), “The Examination of Prospective Financial Information” establishes standards and provides guidance on engagements to examine and report on prospective financial information including examination procedures for best-estimate and hypothetical assumptions. The general guidelines include the following: Acceptance of Engagement Before accepting an engagement to examine prospective financial information, the auditor would consider, amongst other things: * The intended use of the information. * Whether the information will be for general or limited distribution. * The nature of the assumptions, that is, whether they are best-estimate or hypothetical assumptions. * The elements to be included in the information. * The period covered by the information. Nature and Purpose of Prospective Financial Information Prospective financial information can include financial statements or one or more elements of financial statements...
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...appointment Text: Financial and Managerial Accounting, by Needles, Powers, & Crosson, 9e edition, Houghton Mifflin Co. (required) Cases: Harvard Business School Cases (required) Wall Street Journal (recommended) Financial Calculator: Texas Instruments BAII Plus is required Course Objective: This course integrates financial accounting and managerial accounting. The objective is to provide students with an understanding of accounting information from the managers’ perspective and develop students’ ability and analytical skills necessary to use accounting information to make decisions in the business world. The first part of this course introduces financial accounting with the emphasis on financial statement preparation by accountants, selection of reporting strategies by managers, and interpretations by users of corporate financial reports. The second part of this course introduces managerial accounting, which is primarily concerned with data gathering and presentation for purpose of internal management evaluation and decision-making. The objective is to understand the determination of cost structure and develop techniques for evaluating alternative courses of action and decision-making and planning skills. Student Learning Objectives: 1. Basic Comprehension and Application: • MBA/M.S. Accounting students will demonstrate comprehension of basic financial and managerial accounting terminology and concepts. 2. Understanding the Financial Statements and the Use...
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...production 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...
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...of Accounting and to develop in them the ability to evaluate and use accounting data as an aid to decision making. The main purpose is to assist the students in developing skills in problem solving and decision making in the financial area. Emphasis is laid on analysis and utilization of financial and accounting data for planning and control. 2. Course Duration: The course duration is of 40 sessions of 70 minutes each. 3. Course Contents: |Module No: |Module Content |No. of |70 Marks | | | |Sessions |(External | | | | |Evaluation) | |I |Fundamentals of Accounting |10 |20 | | |Basic understanding of accounting, Accounting Concepts, | | | | |Conceptual framework of financial statements, | | | | |Accounting Policies, Journal Entries and preparation of | | ...
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...INTERNATIONAL STANDARD ON AUDITING 700 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS (Effective for audits of financial statements for periods beginning on or after December 15, 2009) Introduction Scope of this ISA 1. This International Standard on Auditing (ISA) deals with the auditor’s responsibility to form an opinion on the financial statements. It also deals with the form and content of the auditor’s report issued as a result of an audit of financial statements. 2. ISA 7051 and ISA 7062 deal with how the form and content of the auditor’s report are affected when the auditor expresses a modified opinion or includes an Emphasis of Matter paragraph or an Other Matter paragraph in the auditor’s report. 3. This ISA is written in the context of a complete set of general purpose financial statements. ISA 8003 deals with special considerations when financial statements are prepared in accordance with a special purpose framework. ISA 8054 deals with special considerations relevant to an audit of a single financial statement or of a specific element, account or item of a financial statement. 4. This ISA promotes consistency in the auditor’s report. Consistency in the auditor’s report, when the audit has been conducted in accordance with ISAs, promotes credibility in the global marketplace by making more readily identifiable those audits that have been conducted in accordance with globally recognized standards. It also helps to promote the user’s understanding...
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...the presentation of financial statements and underlines the importance of financial reporting. As of February 2010, the Chinese accounting standard systems is composed of Basic Standard, 38 specific standards and application guidance. Although China's accounting standards have not called Financial Reporting Standards, however, the concept of International Financial Reporting Standards are consistent. This revised law marked a large step forward for the continuing integration of world trade and capital markets, with China adopting a significant number of the accounting standards laid out by the International Accounting Standards Board. The old Chinese Accounting Standards (CAS) were largely replaced by the International Financial Reporting Standards (IFRS), to bring China more in line with the rest of the world. The similarity between the new Chinese accounting standards and the IFRS is almost 90–95%. Accounting Standard prescribes the behavior of accounting recognition, measurement and reporting. Auditing Standards draw up the standard of financial statement audit and identification behavior. Under the guidance of "Enterprise Accounting Standards", the preparation and presentation of financial statements could be implemented. The basic concepts of financial reporting should include the main contents, should reflect the basic requirements for information. The corporate financial reporting system consists of financial statements, accounting statements and financial situation...
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...Financial Statement Analysis Introduction The authors of Learning Team B choose two health organizations to compute the quick and current liquidity ratios, the DuPont ratio, profit margin, asset utilization, and financial leverage. The health organizations chosen are Happy Hospital and Health Management Associates. Within these two organizations the learning team will be discussing how differences in the industries and different measurements conventions affect presentations, and if one of the companies uses the cash basis of accounting, how would that differ from the accrual basis. The team will also be discussing in what ways the elements of the financial statements interact with one another. How might changing one of the financial statements affect the other financial statements? Why is it essential to understand the relationship between the financial statements? In what ways do the elements of the financial statements interact with one another? The objectives of Financial Statement presentation are to show an interrelated financial depiction of an entity's activities, to disaggregate information so that it is useful in evaluating an entity's future cash flows, and to present information about liquidity and financial flexibility of said entity. An organized financial picture means items in financial statements are clear and that the financial statements of an entity complement one another regularly. Financial statement analysis aimed at objectives such as assessing...
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...(1): Understand the regulatory framework for financial reporting User needs: Accounting standards Board (ASBs) Statement of Principles INTRODUCTION This section of the unit discusses the qualitative characteristics of the financial statements and how it relates to the content and presentation of a financial statement. The second part of this paper sets out to assess the difficulty preparing a useful set of financial statements that exhibits the qualitative characteristics mentioned in the first part. Defining a financial report: A financial report is a written report which quantitatively describes the financial health of a company. Financial statements are usually compiled on a quarterly and annually basis . According to the Accounting Standards Board (1999), the objective of financial statement is to provide information on the reporting entity's financial position and performance that is useful to a wide range of users to assess the management and for decision making. Composition of a complete financial statement As per IAS 1 (international Accounting Standard), a complete set of financial statement comprises of: * A statement of financial position (balance sheet) * A statement of comprehensive income for the period (income statement) * A statement of cash flow * A statement of changes in equity * Notes comprising a summary of significant accounting policies and other explanatory information. * A statement of financial position (Balance sheet) as at the beginning...
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...one of a truly global perspective. There are few businesses left in this world that does not conduct business on an international basis. The need for a universal accounting system is a direct result of the magnitude of international business. Investors, managers, CEOs, and virtually all stakeholders need to understand the accounting information of the other businesses they interact with, regardless of the country or region of the world that business is located. “The effort to join the international financial community in a single set of standards has been in motion for over 40 years. The International Accounting standards Committee was formed in 1973. This committee evolved into the International accounting Standards Board (IASB) in 2001. International security regulators supported accounting regulators in the call for universal standards” (Thomas, 2009, p. 369). “The regulators in the U.S. have been slow to join the efforts for global convergence. In 2002, the Financial Accounting Standards Board (FASB), which issues U.S. GAAP, and the International Accounting Standards Board entered into the Norwalk Agreement. This agreement acknowledges their commitment to high quality accounting standards for use domestically and across borders. This agreement aims to remove the differences between U.S. GAAP and IFRS standards, keep standards in agreement after initial convergence, continue work on joint projects, and coordinate future activities” (Thomas, 2009, p. 370). In 2005, Donald...
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...Mr. James Leisenring, who is a FASB Senior Advisor, makes a presentation about the conceptual framework on Thursday. He expressed some views in this presentation are on his own and do not necessarily represent official position of the financial accounting standard board. Official position of the FASB Board is arrived at only after extensive due process and deliberations. In class, we learned that the conceptual framework is making up with objective, qualitative characteristics, constraints; elements, recognition measurement and disclosure concepts, and financial statement elements which are provide guidance to standard setting. In our text book, the conceptual framework has been described as an “accounting constitution” because it provides the underlying foundation for US accounting standard. And more formally, it is a coherent system of interrelated objectives and fundamental that is intended to lead to consistent standard and that prescribes the nature, function, and limits of financial accounting and reporting. Mr. Leisenring comes up with some different views and concerns of some aspect of the concept framework in his presentation. For example, he talks about the definition of assets liabilities and revenue and expenses, on his view, Mr. leisenring concerns the definition of those concept are kind of vogue and uncertainty. There is no discussion of what items that are not resources or obligations should be recognized or what would be the basis for recognition. He talks about...
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