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

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FINANCIAL REPORTING AND ETHICS(c)(d)(e)(f)The treatment of these costs may have a significant effect on thereported result of an accounting period and on the assets andliabilities of the reporting enterprise. Unless a correct treatmentof such costs is adopted, it may lead to a wrong appraisal of theprofitability of the construction contract.The period for the execution of a Construction Contract dependson the nature, type and size of the contract. Some contracts runfor only a short period of time, as a result of which it may bemore prudent to recognize the profit on such a contract only oncompletion, hence the use of the completed contract method ofrecognizing revenue is recommended by both SAS 5 and IAS 11.Some other contracts, however, may extend over two or moreaccounting periods of the enterprises, in which case, a meaningfulbasis has to be adopted for the determination of the proportionof profit that has been earned as at each accounting date andthe value that needs to be reported in the financial statement aswork- in-progress in the books of the contractor. Hence,percentage of completion method of revenue recognition isrecommended by both accounting standards.Most of the provisions of both SAS 5 and IAS 11 apply to theContractor.The two Statements do not cover:(i)(ii)(iii)(iv)Contracts that deal with the research into and thedevelopment of new products;Service Contracts that fall under job order costing;Property development projects including those oftenreferred to in Nigeria as Contractor Financed Projects; andThe treatment of Construction Contracts in the books ofthe Employer (Contractee) because the value of anyConstruction Contract can be easily determined by theEmployer through the analysis of cash outlays and theliabilities accrued on the contract.(g)These standards are clearly about accounting in the constructionindustry, emphasizing on revenue and income recognition forperiodic financial statements preparation in the industry.5.2.3 Accounting for Government Grants and Government AssistanceRelevant standards and interpretations are:International Accounting Standard 20: Accounting for government grantsand disclosure of government assistance.92
ACCOUNTING STANDARDSThere is no SAS yet on the issues addressed by IAS 20!(a)Governments sometimes transfer economic resources (such ascash and long term assets) to business entities in return for pastor future compliance with certain government conditions. IAS20 prescribes the approach to be adopted in accounting for thesebenefits and how they should be presented in the financialstatements of the benefiting entities. IAS 20 also deals with theaccounting treatment of government assistance with no specificvalue.(b)(c)(d)(e)(f)IAS 20 does not, however, cover accounting for capital grants inthe books of an enterprise, government assistance in terms oftax holidays and treatment of government grant or assistancewhere government is part owner of the business entity.According to IAS 20, grants related to assets are governmentgrants whose primary condition is that an entity qualifying forthem should purchase, construct or otherwise acquire non-currentassets. Subsidiary conditions may also be attached restrictingthe type or location of the assets or the periods during whichthey are to be acquired or held.Government grants relating to income are government grantsother than those related to assets.IAS 20 identifies two methods that could be used to account forgovernment grants, namely capital approach and incomeapproach. Using the capital approach, you are to credit the grantdirectly to shareholders interest, while using the incomeapproach; you are to credit the grant to income statement overone or more period.Presenting the argument in support of the two approaches, IAS20 provides the following in favor of the two:(i) Capital approach:! Government grants are a financing device andshould therefore be recognized in the balancesheet. In the income statement, they would simplyoffset the expenses they are financing.! Grants are not earnings; they are incentives withoutrelated cost, so it would be wrong to take them tothe income statement.(ii) Income approach:! Grants are not contributions from shareholders.Therefore, they should not be credited directly toshareholders interests.93
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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 41 and 42: AMALGAMATION, ABSORPTION AND RECONS
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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
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ETHICAL FRAMEWORK, CONCEPTS AND 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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