Improving disclosure practices

The IASB issued IFRS 12 Disclosure of Interests in Other Entities as part of a suite of new standards that addressed inter entity investments. What was the key disclosure enhancement for investors that was introduced by IFRS 12?

Details concerning the interests in associates and joint ventures of an entity

Information about unconsolidated structured entities

Details concerning the interests in subsidiaries of an entity

Information about the significant judgements and assumptions that an entity has made in determining control

The IASB hosted a public discussion forum on financial reporting in 2013 with the objective of clarifying the problem with disclosure and its causes. Which of the following issues was not an opinion expressed by the forum?

Disclosures fail to be entity-specific

Disclosures provided by entities potentially obstruct more useful information

The concept of materiality did not contribute to excessive disclosures

Disclosures do not communicate an the business model and strategies of an entity

The IASB hosted a public discussion forum on financial reporting in 2013 with the objective of clarifying the problem with disclosure and its causes. Why did the forum feel that there is an accounting risk attached to disclosure?

Progress could only be made if the IASB improved its disclosure requirements

Because there is no drafting guide for the IASB to use when setting disclosure requirements in new and amended Standards

Regulators now make public any issues with entities with the result that investors may mistrust the integrity of management

Because of the sense of shared responsibility with investors

The issue with disclosure overload is prevalent also in the USA. In 2014 the FASB issued the Conceptual Framework for Financial Reporting Chapter 8: Notes to Financial Statements. What does the FASB feel is the primary purpose of notes to financial statements?

To allow decisions about the use of capital resources

To provide financial information relevant to preparers for making decisions about providing resources to the entity

To supplement or further explain the information on the face of financial statements

To allow assessments of cash flows for potential creditors

In July 2016, the IASB set out in a staff paper that proposed an approach to researching their project on Primary Financial Statements. The feedback received on their request for views indicated that the research should initially focus on the reporting of financial performance. Which of the following was not a view share by the respondents to the IASB project?

The focus should be on the structure and content of the statements of financial performance

The distinction between profit or loss and OCI should be more precisely defined

A more consistent and rational approach to disclosures could never be developed

A single measure of performance should be determined

Some respondents to the IASB research project stated that investors would like to understand the return that management has generated from its operations and resources, and the interaction between the business model and performance of an entity. Why was it felt that this project on Primary Financial Statements should be prioritised?

Because investors spend a significant amount of time adjusting the profit and loss figures to arrive at a more representative earnings figure

The interaction of financial reporting and digital reporting should not be considered

There should be less flexibility in the presentation of information

Most investors do not focus on operating profit, net income and EBITDA for their analysis

It was suggested that the IASB explore how the statements of financial performance could be improved to provide more useful information to users. In addition, there was a growing concern about the increasing use of alternative performance measures and non-IFRS information in the communication of performance. What did the research highlight about adjusted or non-GAAP earnings?

There was an increase in media articles discussing the gap between adjusted and IFRS earnings

The descriptions of reconciling items were often too specific

Investors had many more questions about adjusted or non-GAAP earnings than before

10 per cent of FTSE 100 entities had adjusted their IFRS figures to show a more favourable profit

The objective of the IASB research project is to identify and develop a set of principles for disclosure that could form the basis of a standards-level project. The IASB focus is the review and revision of the general requirements in IAS 1 Presentation of Financial Statements. The IASB is looking to potentially amend IAS 8 Accounting Policies, Changes in Accounting Estimates and Error. What is the purpose of the proposed amendment to IAS 8?

To ensure that post balance sheet events are not omitted

To distinguish between provisions and accounting estimates

To assist enforcers to identify divergent practices

To clarify the definitions of a change in accounting policy and a change in accounting estimate

As a result of the feedback and research undertaken, the IASB has suggested certain areas for inclusion in its project. Which of the following is not one of those areas?

Standardising some subtotals in the statement of financial performance

Analysing the use of alternative performance measures and non-IFRS information

Standardising the structure of the statement of financial performance

Considering whether to allow flexibility in choosing whether an item is an operating expense or financing expense

There are a number of other standard setters and regulators that have undertaken projects on disclosure overload. In 2013 the European Financial Reporting Advisory Group (EFRAG) issued Towards a disclosure framework for the notes. Which of the following was a key outcome of the document?

There was little support for communication principles

There should be a shift away from just compliance with regulation

A more consistent and rational approach to disclosures could never be developed

There should be more regulation concerning alternative performance measures

Improving disclosure practices

The IASB issued IFRS 12 Disclosure of Interests in Other Entities as part of a suite of new standards that addressed inter entity investments. What was the key disclosure enhancement for investors that was introduced by IFRS 12?

The IASB hosted a public discussion forum on financial reporting in 2013 with the objective of clarifying the problem with disclosure and its causes. Which of the following issues was not an opinion expressed by the forum?

The IASB hosted a public discussion forum on financial reporting in 2013 with the objective of clarifying the problem with disclosure and its causes. Why did the forum feel that there is an accounting risk attached to disclosure?

The issue with disclosure overload is prevalent also in the USA. In 2014 the FASB issued the Conceptual Framework for Financial Reporting Chapter 8: Notes to Financial Statements. What does the FASB feel is the primary purpose of notes to financial statements?

As a result of the feedback and research undertaken, the IASB has suggested certain areas for inclusion in its project. Which of the following is not one of those areas?

There are a number of other standard setters and regulators that have undertaken projects on disclosure overload. In 2013 the European Financial Reporting Advisory Group (EFRAG) issued Towards a disclosure framework for the notes. Which of the following was a key outcome of the document?

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Improving disclosure practices

The IASB issued IFRS 12 Disclosure of Interests in Other Entities as part of a suite of new standards that addressed inter entity investments. What was the key disclosure enhancement for investors that was introduced by IFRS 12?

The IASB hosted a public discussion forum on financial reporting in 2013 with the objective of clarifying the problem with disclosure and its causes. Which of the following issues was not an opinion expressed by the forum?

The IASB hosted a public discussion forum on financial reporting in 2013 with the objective of clarifying the problem with disclosure and its causes. Why did the forum feel that there is an accounting risk attached to disclosure?

The issue with disclosure overload is prevalent also in the USA. In 2014 the FASB issued the Conceptual Framework for Financial Reporting Chapter 8: Notes to Financial Statements. What does the FASB feel is the primary purpose of notes to financial statements?

As a result of the feedback and research undertaken, the IASB has suggested certain areas for inclusion in its project. Which of the following is not one of those areas?

There are a number of other standard setters and regulators that have undertaken projects on disclosure overload. In 2013 the European Financial Reporting Advisory Group (EFRAG) issued Towards a disclosure framework for the notes. Which of the following was a key outcome of the document?

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