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

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FINANCIAL REPORTING AND ETHICSprovisions of an SAS on an accounting topic and those of an IAS, the conflict isto be resolved in favor of the SAS. The provisions of an IAS on an accountingtopic are fully applicable in Nigeria, where an SAS is not issued on the topic.Students of Financial Accounting/Reporting at the academic and professionallevels must demonstrate adequate proficiency in the provisions of all the localand international accounting standards issued by the standards settingbodies for them to be accepted as good accounting graduates or as goodprofessional accountants. They are, therefore, expected to have adequateknowledge of all the SASs, IASs and IFRSs, IPSASs (International PublicSector Accounting Standards) that have been issued so far.This Chapter highlights some major provisions made in some of theStatements of Accounting Standards issued by the Nigerian AccountingStandards Board and similar provisions made in relevant IASs and IFRSs. Theaim is to encourage readers to work towards acquiring a thorough knowledgeof the financial statements areas covered in those SASs, IASs and IFRSs with asolid understanding of the subject matter. The chapter is also aimed atensuring that readers acquire sufficient understanding of the applicationareas for those accounting standards so that they can exercise reasonableprofessional judgment in the subject matter.5.2 MAJOR ISSUES ADDRESSED IN SELECTED ACCOUNTING STANDARDS5.2.1 Statement of Cash flowsRelevant Standards are:(a) Statement of Accounting Standard 18: Statements of Cash Flows(b) International Accounting Standard 7: Cash Flow StatementsThese standards address the following important issues:(a) A statement of cash flow provides information about cashreceipts and cash payments of an enterprise over a givenperiod. It indicates the pattern of cash generation andutilization. It reveals how cash is generated from operations orthrough new capital raised and how payments are made fortaxes, dividends, new investments and debts. It is designed toshed light on an enterprise’s financial strength. Just as theseprovisions are made in SAS 18 for Nigerian enterprises tocomply, they are also made in IAS 7, requiring every enterprise,anywhere in the world, to publish a statement which shows itscash inflows and cash outflows over a given period.(b)Both SAS 18 and IAS 7 stressed the fact that the informationprovided in a statement of cash flows, if used with relateddisclosure and other information in the financial statements,will, over a period, assist users to:90
ACCOUNTING STANDARDS(i)(ii)(iii)(iv)(v)assess the impact of its current transactions – operating,investing and financing activities - on its performance andfinancial position;assess the ability of the enterprise to meet its debt obligations,pay dividends and meet other claims;assess the ability of the enterprise to finance ongoingoperations and growth from internal sources and determine theamount of external financing required;reconcile profit/loss and cash flow; andassess the ability of the enterprise to generate positive netfuture cash flows.(c)(d)Both standards (SAS 18 and IAS 7) emphasize that a Statement ofSource and Application of Funds is based on movements in workingcapital components. Working capital encompasses cash, cashequivalents and other assets which are convertible into cash within anaccounting year, such as debtors and stocks. The main reason why theStatement of Cash Flows is now regarded as a preferred parameter forevaluating corporate liquidity is that the Statement of Source andApplication of Funds based on movements in working capital canobscure movements relevant to the viability and liquidity of anenterprise. For example, a potentially disastrous decrease in cashavailable can be masked by an increase in stock or debtors. Enterprisesmay, therefore, run out of cash while reporting increases in workingcapital.Going through the two accounting standards, readers would learn aboutthe precise definitions of cash, cash equivalent, operating activities,investing activities, financing activities, etc. The two standards accordcash and its management the attention and seriousness they deservein accounting sense!5.2.2 Construction ContractsRelevant Standards are:(a) Statement of Accounting Standard 5: Construction Contracts.(b) International Accounting Standard 11: Construction Contracts.These standards address the following matters:(a) The main issues involved in accounting for Construction Contracts,especially by the contractor, are the timing, measurement andrecognition of revenue and the asset created during construction.(b)Costs on a Construction Contract may start to accumulate evenbefore the contract is won. It is, therefore, necessary todetermine the accounting treatment that should be accorded tosuch costs as soon as there is a convincing evidence that thecontract will be won.91
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FINANCIAL REPORTING AND ETHICS1.3.3
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ACCOUNTING AND REPORTING POLICIESsu
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ACCOUNTING AND REPORTING POLICIES(j
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ACCOUNTING AND REPORTING POLICIES(i
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ACCOUNTING AND REPORTING POLICIES2.
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3AMALGAMATION, ABSORPTION ANDRECONS
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AMALGAMATION, ABSORPTION AND RECONS
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Page 113 and 114: 6ETHICAL FRAMEWORK, CONCEPTSAND VAL
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ETHICAL FRAMEWORK, CONCEPTS AND VAL
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7THE ENVIRONMENT: CORPORATE,PROFESS
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THE ENVIRONMENT: CORPORATE, PROFESS
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8PROFESSIONAL ETHICS8. 0 LEARNING O
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PROFESSIONAL ETHICSobjectivity are
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PROFESSIONAL ETHICS(c)(d)The type o
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PROFESSIONAL ETHICSabout conflicts
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PROFESSIONAL ETHICS(d)(e)Confidenti
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PROFESSIONAL ETHICSA. III onlyB. II
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9DECISION MAKING IN ETHICS9. 0 LEAR
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DECISION MAKING IN ETHICS9.2 A FRAM
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ETHICAL THREATS AND SAFEGUARDS(d)We
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DECISION MAKING IN ETHICS4. A perso
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10ETHICAL THREATS TS AND SAFEGUARDS
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ETHICAL THREATS AND SAFEGUARDS(iv)(
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ETHICAL THREATS AND SAFEGUARDSto th
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ETHICAL THREATS AND SAFEGUARDSpayab
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ETHICAL THREATS AND SAFEGUARDS(a)Fi
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ETHICAL THREATS AND SAFEGUARDSimmin
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ETHICAL THREATS AND SAFEGUARDSHowev
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ETHICAL THREATS AND SAFEGUARDS(iii)
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11CORPORATE GOVERNANCE11.0 LEARNING
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CORPORATE GOVERNANCE11.3.1 Nature(a
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CORPORATE GOVERNANCEThe company sho
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CORPORATE GOVERNANCEtrust, possible
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CORPORATE GOVERNANCEAn agent has im
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CORPORATE GOVERNANCE(a)(b)(c)(d)(e)
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CORPORATE GOVERNANCE11.6.1 The law
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CORPORATE GOVERNANCEILLUSTRAUSTRATI
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CORPORATE GOVERNANCEimitated. They
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CORPORATE GOVERNANCE(a)(b)Greenbury
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CORPORATE GOVERNANCE11.9.2 Boards d
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CORPORATE GOVERNANCErelationship wi
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CORPORATE GOVERNANCE(e)(f)(g)(h)(i)
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CORPORATE GOVERNANCE(vi)Inquisitive
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CORPORATE GOVERNANCE(e)ConsultancyA
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CORPORATE GOVERNANCEThe incoming au
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CORPORATE GOVERNANCEIn summary, acc
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CORPORATE GOVERNANCEAccording to Th
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CORPORATE GOVERNANCE3. A body corpo
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12SOCIAL AND ENVIRONMENTALISSUES IN
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SOCIAL AND ENVIRONMENTAL ISSUES IN
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APPENDIX ISUGGESTED SOLUTIONS TO RE
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SUGGESTED SOLUTIONS TO REVISION QUE
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SUGGESTED SOLUTIONS TO REVISION QUE
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APPENDIX IICOMPREHENSIVE QUESTIONS
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COMPREHENSIVE QUESTIONS AND SUGGEST
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APPENDIX IIICASE STUDY 1Karsashi, a
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CASE STUDIES(iii)(iv)The floor sale
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CASE STUDIESShare price and dividen
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CASE STUDIESSUGGESTED SOLUTION(A) A
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CASE STUDY 3The following informati
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CASE STUDIESCASE STUDY 4Ologobojo i
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APPENDIX IVTable 1:SUMMARY OF INTER
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SUMMARY OF INTERNATIONAL ACCOUNTING
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APPENDIX VGLOSSARY OF TERMSAbsorpti
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GLOSSARY OF TERMSEthical Objectivis
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APPENDIX VIBIBLIOGRAPHYChambers Ham
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APPENDIX VIISTUDY AND EXAMINATION T
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STUDY AND EXAMINATION TECHNIQUES7.3
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INDEXAAbsorption, 17, 19, 39, 40, 4
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INDEXProfessional Behaviour, 136, 1
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