Summary
Summary All Lectures Advanced Financial Accounting (including Exam April 2020)
- Course
- Institution
This summary contains all lectures of AFA and the exam of April 2020
[Show more]
Seller
Follow
SophievA
Reviews received
Content preview
Lecture 1 - Introduction - Tuesday 2 February 1Lecture 2 - Assets and Revenue Recognition - Tuesday 9 February 9
Lecture 3 - Liabilities - Tuesday 16 February 18
Lecture 4 - Financial Statement Analysis - Tuesday 23 February 24
Lecture 5 - Financial Instruments and Strategy Analysis - Tuesday 2 March 33
Lecture 6 - Group Accounting - Tuesday 9 March 41
,Lecture 1 - Introduction - Tuesday 2 February
Financial vs Management accounting
Financial Accounting (FA) = external financial reporting. e.g. what we show to the audience,
net profit, equity, etc. and how the management sees the future. Providing information for the
shareholders, bank, fiscal authorities, so more for the external audience of the enterprise.
Management Accounting (MA) = information useful in the internal decision and management
processes. e.g. budget and Activity Based Costing (ABC) accounting.
IASB = The International Accounting Standards Board (IASB)
IFRS = International Financial Reporting Standards (IFRS): the contrary of local GAAP.
The main issues for international accounting standards:
- Should (financial) accounting be the same everywhere?
Ideally spoken, yes, because investors can more easily compare companies.
However, it is not the same everywhere.
- Should it be exactly the same? Is some diversity acceptable or useful?
It is not exactly the same. Diversity is acceptable and useful because not all
companies are in the same circumstances.
- Who should have the power to set international standards?
Nowadays the IASB has the power to set international standards.
- How should the standard-setter determine what the ‘right’ standards are?
The IASB and IFRS as they are today are answers to these questions, but few people think
we already have the definitive answers.
The International Accounting Standards Board
The current composition of IASB: niet belangrijk
IASB
- A private-sector body
- Operates under the IFRS Foundation (IFRSF)
- Has no responsibility to any governmental organization
1
, - Has no enforcement authority
- Develops and issues both main standards (IAS/IFRS) and interpretations (SIC/IFRIC)
IASC / IASB history outline [hoeven we niet te kennen maar voor overview]
● 1973: the founding of IASC
- ‘owned’ by accountancy bodies
- basic standards, numerous options
● 1987: first contacts with securities regulators (IOSCO)
- more rigorous standards, reduction of options
- the aim is the endorsement by US Securities and Exchange Commission
(SEC) for cross border listing
● 2000:
- SEC effectively refuses endorsement
- European Commission announces mandatory application in EU by 2005
● 2001: IASC restructured into IASB
- A fully independent body, the accountancy profession relinquishes control
● 2001-2012:
- Significant rewriting of standards, new standards
- Close cooperation (‘convergence’) with US Financial Accounting Standards
Board (FASB)
- Many countries follow EU and adopt IFRS, IFRS adoption seriously
considered in the US
- Extensive debates over governance of IASB, creation of Monitoring Board
● 2012
- US adoption of IFRS off the cards, completion of main convergence projects
with FASB
- Consolidation: few new projects, improvement, and maintenance of existing
standards
Application of IFRS by domestic listed companies (2020)
e.g. US: foreign listed companies on the US stock exchange (e.g. NYSE) have the possibility
to apply IFRS.
Africa: no local GAAP so they use IFRS.
2
, IASB due process
Due process
Independence is key:
- full-time board
- the board controls the technical agenda and makes all decisions on standards
Balanced by:
- transparency: public meetings, most documentation in public domain
- wide consultation: discussion papers, exposure drafts, invitations to comment,
advisory groups, roundtables, etc.
- due process oversight by trustees
- public accountability to Monitoring Board
‘Undue’ processes
- direct lobbying of IASB by reporting companies
- indirect lobbying: through national governments, legislatures, regulators. Ultimate
threat: withhold, revoke, modify the legal status of IFRS
IFRS in the EU
- EU is the IASBs ‘first customer’
- Mandatory use (for listed companies, only for their consolidated financial statements)
of IFRS ‘as adopted by EU’:
-
- The endorsement process often simply technocratic, but on occasion heavily political
- Most standards endorsed, but some delays and ‘carve-outs’
3
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller SophievA. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.59. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
84251 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now