Financial Reporting and Ethics - The Institute of Chartered ...

More documents

Recommendations

Info

FINANCIAL REPORTING AND ETHICS(a)(b)(c)(d)(e)(f)Comparisons of ratios can be misleading unless they arecalculated from uniform data using uniform accounting policies;Ratios calculated from financial statements prepared onhistorical cost basis cannot give a true picture of year-to-yeartrends because of the impact of inflation;Financial statements do not give a complete picture of theactivities of a firm, as only items that can be measured in moneyterms are included. For instance, the strength or weakness ofmanagement is omitted. Thus, the ratios calculated from thesestatements are also defective in this regard;For purposes of overall assessment of the financial strength orweakness of a firm, the fact that there is no ideal ratio makes thetask difficult. For instance, a current ratio of less than 2 could bedangerous for many firms but quite acceptable for some others;The factors influencing the performance of a firm in one yearmay change in another year and thus render horizontal analysismisleading; andThe balance sheet prepared at different points in time are staticin nature, and therefore cannot give much information aboutthe pre and post balance sheet events.4.10 IDENTIFYING CHOICES OF ACCOUNTING TREATMENTS TMENTS ADOPTED INFINANCIAL STATEMENTSTEMENTSTo effectively compare the financial accounting information of differentcompanies, there must be consistency in their accounting treatments. SAS 1also requires an enterprise to select and apply appropriate accountingtreatments which comply with accounting standards to ensure that the financialstatements provide information that is relevant and reliable.Accounting treatments are the specific accounting methods, bases and conceptschosen by an enterprise in the preparation and presentation of its financialstatements. To select a suitable accounting policy, the factors to be consideredinclude:(a) Fairness(b) Materiality(c) Substance over form(d) Objectivity(e) PrudenceWhen a particular treatment, which complies with a particular standard isadopted to show a faithful representation of events, such compliance must bedisclosed. When an organisation decides that compliance with a particularpolicy or standard will not give a true and fair view of events, such treatmentmay be departed from and the financial statements must disclose:(a) That the financial statements show a true and fair view;86
ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS(b)(c)(d)That standards are complied with except for the departure from astandard in order to achieve a fair presentation;The standard departed from and explanation of the circumstances; andThe financial impact of the departure.4.11 SUMMARY AND CONCLUSIONSThis chapter has discussed analysis and interpretation of financial statementswith particular and detailed reference to the requirements of the InternationalFinancial Reporting Standards and the Generally Accepted AccountingPractices. The use and classification of financial ratios have been fullydiscussed while sufficient attention has also been devoted to Trend Analysis,Inter-firm Analysis and Limitations of ratios in Interpreting FinancialStatements.Refer to Comprehensive Questions and Suggested Solutions in Appendix II,page 269.4.12 REVISION QUESTIONS4.12.1 MULTIPLE-TIPLE-CHOICE QUESTIONS1. A company’s ability to meet its obligations as at when due will be shownby:A. Value Added Statement.B. Income Statement.C. Shareholders’ Fund.D. Cash Flow Statement.E. Value of all fixed assets2. Which of the following, according to SAS 2, does not need to be stated inthe financial statements of a reporting enterprise?A. Enterprise’s legal form.B. Business of the enterprise.C. Intention to cease being a going concernD. Relationship with local and overseas suppliers.E. Name and location of the enterprise.3. in selecting a suitable accounting policy all the following factors shouldbe considered except:A. Fairness.B. Substance over form.C. Materiality.D. Prudence.E. Sensitivity.4. Inter-firm analysis could be rendered invalid byA. The use of different accounting dates by the various companies.B. Application of different accounting policies.C. Operating in different market segments.D. The differences in the management structures and technicalexpertise.E. The product range and sales mix variations among the companies87
Page 4:
FINANCIAL REPORTING AND ETHICS1.3.3
Page 11 and 12:
ACCOUNTING AND REPORTING POLICIESsu
Page 13 and 14:
ACCOUNTING AND REPORTING POLICIES(j
Page 15 and 16:
ACCOUNTING AND REPORTING POLICIES(i
Page 17 and 18:
ACCOUNTING AND REPORTING POLICIES2.
Page 19 and 20:
3AMALGAMATION, ABSORPTION ANDRECONS
Page 21 and 22:
AMALGAMATION, ABSORPTION AND RECONS
Page 23 and 24:
Page 25 and 26:
Page 27 and 28:
Page 29 and 30:
Page 31 and 32:
Page 33 and 34:
Page 35 and 36: AMALGAMATION, ABSORPTION AND RECONS
Page 67 and 68: 4ANALYSIS AND INTERPRETATION TION O
Page 69 and 70: ANALYSIS AND INTERPRETATION OF FINA
Page 85: ANALYSIS AND INTERPRETATION OF FINA
Page 89 and 90: 5ACCOUNTING STANDARDS5.0 LEARNING O
Page 91 and 92: ACCOUNTING STANDARDS(i)(ii)(iii)(iv
Page 93 and 94: ACCOUNTING STANDARDSThere is no SAS
Page 95 and 96: ACCOUNTING STANDARDS5.2.4 Borrowing
Page 97 and 98: ACCOUNTING STANDARDS(iii)Certain pe
Page 99 and 100: ACCOUNTING STANDARDSby venture capi
Page 101 and 102: ACCOUNTING STANDARDSIFRS 7 Financia
Page 103 and 104: ACCOUNTING STANDARDSactivity, non-c
Page 105 and 106: ACCOUNTING STANDARDSin the year inc
Page 107 and 108: ACCOUNTING STANDARDS(v)(vi)(vii)whe
Page 109 and 110: ACCOUNTING STANDARDS(v)Actions requ
Page 111 and 112: ACCOUNTING STANDARDSAccounting stud
Page 113 and 114: 6ETHICAL FRAMEWORK, CONCEPTSAND VAL
Page 115 and 116: ETHICAL FRAMEWORK, CONCEPTS AND VAL
Page 137 and 138:
ETHICAL FRAMEWORK, CONCEPTS AND VAL
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
7THE ENVIRONMENT: CORPORATE,PROFESS
Page 149 and 150:
THE ENVIRONMENT: CORPORATE, PROFESS
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
8PROFESSIONAL ETHICS8. 0 LEARNING O
Page 173 and 174:
PROFESSIONAL ETHICSobjectivity are
Page 175 and 176:
PROFESSIONAL ETHICS(c)(d)The type o
Page 177 and 178:
PROFESSIONAL ETHICSabout conflicts
Page 179 and 180:
PROFESSIONAL ETHICS(d)(e)Confidenti
Page 181 and 182:
PROFESSIONAL ETHICSA. III onlyB. II
Page 183 and 184:
9DECISION MAKING IN ETHICS9. 0 LEAR
Page 185 and 186:
DECISION MAKING IN ETHICS9.2 A FRAM
Page 187 and 188:
ETHICAL THREATS AND SAFEGUARDS(d)We
Page 189 and 190:
DECISION MAKING IN ETHICS4. A perso
Page 191 and 192:
10ETHICAL THREATS TS AND SAFEGUARDS
Page 193 and 194:
ETHICAL THREATS AND SAFEGUARDS(iv)(
Page 195 and 196:
ETHICAL THREATS AND SAFEGUARDSto th
Page 197 and 198:
ETHICAL THREATS AND SAFEGUARDSpayab
Page 199 and 200:
ETHICAL THREATS AND SAFEGUARDS(a)Fi
Page 201 and 202:
ETHICAL THREATS AND SAFEGUARDSimmin
Page 203 and 204:
ETHICAL THREATS AND SAFEGUARDSHowev
Page 205 and 206:
ETHICAL THREATS AND SAFEGUARDS(iii)
Page 207 and 208:
11CORPORATE GOVERNANCE11.0 LEARNING
Page 209 and 210:
CORPORATE GOVERNANCE11.3.1 Nature(a
Page 211 and 212:
CORPORATE GOVERNANCEThe company sho
Page 213 and 214:
CORPORATE GOVERNANCEtrust, possible
Page 215 and 216:
CORPORATE GOVERNANCEAn agent has im
Page 217 and 218:
CORPORATE GOVERNANCE(a)(b)(c)(d)(e)
Page 219 and 220:
CORPORATE GOVERNANCE11.6.1 The law
Page 221 and 222:
CORPORATE GOVERNANCEILLUSTRAUSTRATI
Page 223 and 224:
CORPORATE GOVERNANCEimitated. They
Page 225 and 226:
CORPORATE GOVERNANCE(a)(b)Greenbury
Page 227 and 228:
CORPORATE GOVERNANCE11.9.2 Boards d
Page 229 and 230:
CORPORATE GOVERNANCErelationship wi
Page 231 and 232:
CORPORATE GOVERNANCE(e)(f)(g)(h)(i)
Page 233 and 234:
CORPORATE GOVERNANCE(vi)Inquisitive
Page 235 and 236:
CORPORATE GOVERNANCE(e)ConsultancyA
Page 237 and 238:
CORPORATE GOVERNANCEThe incoming au
Page 239 and 240:
CORPORATE GOVERNANCEIn summary, acc
Page 241 and 242:
CORPORATE GOVERNANCEAccording to Th
Page 243 and 244:
CORPORATE GOVERNANCE3. A body corpo
Page 245 and 246:
12SOCIAL AND ENVIRONMENTALISSUES IN
Page 247 and 248:
SOCIAL AND ENVIRONMENTAL ISSUES IN
Page 249 and 250:
Page 251 and 252:
Page 253 and 254:
Page 255 and 256:
Page 257 and 258:
Page 259 and 260:
Page 261 and 262:
Page 263 and 264:
APPENDIX ISUGGESTED SOLUTIONS TO RE
Page 265 and 266:
SUGGESTED SOLUTIONS TO REVISION QUE
Page 267 and 268:
SUGGESTED SOLUTIONS TO REVISION QUE
Page 269 and 270:
APPENDIX IICOMPREHENSIVE QUESTIONS
Page 271 and 272:
COMPREHENSIVE QUESTIONS AND SUGGEST
Page 273 and 274:
Page 275 and 276:
Page 277 and 278:
APPENDIX IIICASE STUDY 1Karsashi, a
Page 279 and 280:
CASE STUDIES(iii)(iv)The floor sale
Page 281 and 282:
CASE STUDIESShare price and dividen
Page 283 and 284:
CASE STUDIESSUGGESTED SOLUTION(A) A
Page 285 and 286:
CASE STUDY 3The following informati
Page 287 and 288:
CASE STUDIESCASE STUDY 4Ologobojo i
Page 289 and 290:
APPENDIX IVTable 1:SUMMARY OF INTER
Page 291 and 292:
SUMMARY OF INTERNATIONAL ACCOUNTING
Page 293 and 294:
APPENDIX VGLOSSARY OF TERMSAbsorpti
Page 295 and 296:
GLOSSARY OF TERMSEthical Objectivis
Page 297 and 298:
APPENDIX VIBIBLIOGRAPHYChambers Ham
Page 299 and 300:
APPENDIX VIISTUDY AND EXAMINATION T
Page 301 and 302:
STUDY AND EXAMINATION TECHNIQUES7.3
Page 303 and 304:
INDEXAAbsorption, 17, 19, 39, 40, 4
Page 305 and 306:
INDEXProfessional Behaviour, 136, 1
Page 307 and 308:
307
Page 309:
309
show all

Financial Reporting and Ethics - The Institute of Chartered ...

Create successful ePaper yourself

Delete template?

Save as template?