College of Administration and Finance Sciences
Assignment (1)
Deadline: Saturday 8/10/2022 @ 23:59
Course Name: Financial Accounting
Student’s Name:
Course Code: ACCT 201
Student’s ID Number:
Semester: 1st
CRN:
Academic Year: 1444 H
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
/15
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
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reduced for poor presentation. This includes filling your information on the cover
page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
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other resources without proper referencing will result in ZERO marks. No exceptions.
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No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.
College of Administration and Finance Sciences
Assignment Question(s):
(Marks 15)
Q1. a. Globalization demands a single set of high-quality international accounting standards.
Explain at least 5 elements that demands a single set of high-quality international accounting
standards. (Mark 1)
b. Name the two major organizations that sets standards and explain the due processes of
setting a new accounting standard? Please write one paragraph. (Mark 1)
Q2. An adjusting journal entry is typically made just prior to issuing a company’s financial statements.
What do you understand by adjusting entries? Give examples (Marks 2)
Q3. Presented below is information related to CHO Co. for the month of January 2018.
Cost of Goods Sold
Freight-out
Insurance expense
Rent expense
Dividends
202,000
7,000
12,000
20,000
1,000
Salary expense
Sales discount
Sales returns and allowances
Sales
61,000
8,000
13,000
340,000
Instructions: Prepare the closing entries. (Marks 4)
Q4. The retained earnings statement of XYZ Corporation on 31st December 2021 had the
following balances:
Balance, January 1
SAR 165,000
Net income
35,000
Dividends
(20,000)
Balance, December 31
$
180,000
However, before issuing the report for the year ended December 31, 2021, it discover a SAR
20,000 error undervalued inventory that overstated the net income to be higher in 2020 and
overvalued depreciation amount of $5,000 which understated net income in 2020. How would
College of Administration and Finance Sciences
this discovery have an impact on the reporting of the Statement of Retained Earnings for
2021? ? (Marks 3)
Q5. a. Presented below is the adjusted trial balance of Abdullah Corporation at December 31,
2020.
Accounts Payable
10,000
Wages Payable
500
Unearned Service Revenue
2,000
Bonds Payable, due 2017
9,000
Share Capital – Ordinary
10,000
Share premium
2000
Retained Earnings
20,000
Net loss
2500
Required: Prepare a classified section on Equity and Liabilities. (Marks 3)
b. What are the requirements of IFRS for a complete set of financial statements be presented
annually? (Mark 1)
Slide
1-1
CHAPTER
1
FINANCIAL REPORTING AND
ACCOUNTING STANDARDS
Intermediate Accounting
IFRS Edition
Kieso, Weygandt, and Warfield
Slide
1-2
Learning
Learning Objectives
Objectives
1.
Identify the major financial statements and other means of
تحديد البيانات املالية الرئيسية وغيرها من وسائل إعداد التقارير املالية.
financial reporting.
2.
Explain how accounting assists in the efficient use of scarce
اشرح كيف تساعد املحاسبة في االستخدام الفعال للموارد النادرة.
resources.
3.
Explain the need for high-quality standards.
اشرح الحاجة إلى معايير عالية الجودة.
4.
Identify the objective of financial reporting.
تحديد الهدف من التقارير املالية.
Slide
1-3
5.
Identify the major policy-setting bodies and their role in the
standard-setting process.
تحديد هيئات وضع السياسات الرئيسية ودورها في عملية وضع املعايير.
6.
Explain the meaning of IFRS.
7.
Describe the challenges facing financial reporting.
اشرح معنى املعايير الدولية إلعداد التقارير املالية.
صف التحديات التي تواجه التقارير املالية.
Financial
Financial Reporting
Reporting and
and Accounting
Accounting Standards
Standards
Global Markets
Financial
statements and
financial reporting
Accounting and
capital allocation
املحاسبة وتخصيص رأس املال
High-quality
standards
معايير الجودة العالية
Objective of
Financial
Reporting
General-purpose
financial statements
البيانات املالية لألغراض العامة
Capital providers
مقدمو رأس املال
املنظمات التي تضع املعايير
Financial
Reporting
Challenges
Standard-Setting
Organizations
IOSCO
Political
environment
IASB
Hierarchy of IFRS
بيئة سياسية
Expectations gap
Entity perspective التسلسل الهرمي للمعايير الدولية إلعداد التقارير املالية
منظور الكيان
Decision-usefulness
قرار فائدة
فجوة التوقعات
Significant financial
reporting issues
قضايا إعداد التقارير املالية الهامة
Ethics
أخالق مهنية
International
convergence
التقارب الدولي
Slide
1-4
Global
Global Markets
Markets
World markets are becoming increasingly intertwined.
أصبحت األسواق العاملية متشابكة بشكل متزايد.
Top 20 Global Companies In Terms Of Sales
شركة عاملية من حيث املبيعات20 أفضل
Slide
1-5
Global
Global Markets
Markets
Significant number of foreign companies are found on
national exchanges.
Illustration 1-2
تم العثور على عدد كبير من الشركات األجنبية في البورصات الوطنية.
Slide
1-6
International Exchange
Statistics
Global
Global Markets
Markets
Financial Statements and Financial Reporting
Characteristics of accounting are: خصائص املحاسبة هي:
(1)
Slide
1-7
the identification, measurement, and communication
of financial information about
(2)
economic entities to
(3)
interested parties.
تحديد وقياس و إبالغ املعلومات املالية حول
(2) الكيانات االقتصادية ل
(3) األطراف املهتمة.
LO 1 Identify the major financial statements and other means of financial reporting.
Global
Global Markets
Markets
Economic Entity
Financial Statements
Additional Information
Financial
Information
Statement of
Financial Position
President’s letter
Accounting?
Identify
and
Measure
and
Communicate
بيان املركز املالي
Income Statement
or Statement of
Comprehensive
Income
بيان الدخل أو بيان الدخل الشامل
Statement of Cash
Flows
بيان التدفقات النقدية
Statement of
Changes in Equity
بيان التغيرات في حقوق امللكية
Note Disclosures
إفصاحات املالحظة
Slide
1-8
رسالة الرئيس
Prospectuses
نشرة االكتتاب
Reports filed with
governmental
agencies
رفع التقارير للجهات الحكومية
News releases
النشرات اإلخبارية
Forecasts
التنبؤ
Environmental
impact statements
بيانات التأثير البيئي
Etc.
LO 1 Identify the major financial statements and other means of financial reporting.
Global
Global Markets
Markets
Accounting and Capital Allocation
املحاسبة وتخصيص رأس املال
Resources are limited. Efficient use of resources often
determines whether a business thrives.
. غالبًا ما يحدد االستخدام الفعال للموارد ما إذا كانت الشركة تزدهر أم ال.املوارد محدودة
Slide
1-9
Illustration 1-3
Capital Allocation Process
LO 2 Explain how accounting assists in the efficient use of scare resources.
Global
Global Markets
Markets
High Quality Standards
Globalization demands a single set of high-quality
international accounting standards. Some elements:
: بعض العناصر.تتطلب العوملة مجموعة واحدة من معايير املحاسبة الدولية عالية الجودة
1. Single set of high-quality accounting standards established by
a single standard-setting body. .مجموعة واحدة من معايير املحاسبة عالية الجودة التي وضعتها هيئة واحدة لوضع املعايير
2. Consistency in application and interpretation.
3. Common disclosures.
.االتساق في التطبيق والتفسير
.اإلفصاحات الشائعة
4. Common high-quality auditing standards and practices.
.معايير وممارسات تدقيق مشتركة عالية الجودة
5. Common approach to regulatory review and enforcement.
6. Education and training of market participants.
.نهج مشترك للمراجعة التنظيمية واإلنفاذ
.تعليم وتدريب املشاركني في السوق
Slide
1-10
(Continued)
LO 3 Explain the need for high-quality standards.
Global
Global Markets
Markets
High Quality Standards
Globalization demands a single set of high-quality
international accounting standards. Some elements:
7. Common delivery systems (e.g., eXtensible Business
Reporting Language—XBRL). .(XBRL – لغة إعداد التقارير التجارية القابلة للتوسيع، أنظمة التسليم الشائعة )على سبيل املثال
8. Common approach to corporate governance and legal
نهج مشترك لحوكمة الشركات واألطر القانونية حول العالم
frameworks around the world
Slide
1-11
LO 3 Explain the need for high-quality standards.
Slide
1-12
LO 3 Explain the need for high-quality standards.
Objective
Objective of
of Financial
Financial Accounting
Accounting
Objective: Provide financial information about the reporting
entity that is useful to
present and potential equity investors,
lenders, and
other creditors
in making decisions in their capacity as capital providers.
توفير معلومات مالية حول الكيان املبّلغ عنه والتي تكون مفيدة ل:الهدف
املستثمرين الحاليني واملحتملني في األسهم
واملقرضني
والدائنني اآلخرين
في اتخاذ القرارات بصفتهم مقدمي رأس املال.
Slide
1-13
LO 4 Identify the objectives of financial reporting.
Objective
Objective of
of Financial
Financial Accounting
Accounting
General-Purpose Financial Statements
Provide financial reporting information to a wide variety
توفير معلومات التقارير املالية ملجموعة واسعة من املستخدمني.
of users.
Provide the most useful information possible at the
least cost.
قدم أكثر املعلومات املفيدة املمكنة بأقل تكلفة.
Capital Providers (Investors)
Investors are the primary user group.
(مقدمو رأس املال )املستثمرون
املستثمرون هم مجموعة املستخدمني األساسية.
Slide
1-14
LO 4 Identify the objectives of financial reporting.
Objective
Objective of
of Financial
Financial Accounting
Accounting
Entity Perspective
Companies viewed as separate and distinct from their owners.
.تعتبر الشركات منفصلة ومتميزة عن أصحابها
Decision-Usefulness
Investors are interested in assessing the company’s
يهتم املستثمرون بتقييم الشركة
1. ability to generate net cash inflows and
القدرة على توليد صافي التدفقات النقدية و
2. management’s ability to protect and enhance the
capital providers’ investments.
.قدرة اإلدارة على حماية وتعزيز استثمارات مقدمي رأس املال
Slide
1-15
LO 4 Identify the objectives of financial reporting.
Objective
Objective of
of Financial
Financial Accounting
Accounting
Review Question
The objective of financial reporting places most
emphasis on:
a. reporting to capital providers.
b. reporting on stewardship.
c. providing specific guidance related to specific
needs.
d. providing information to individuals who are
experts in the field.
:يركز الهدف من إعداد التقارير املالية بشكل أكبر على
تقديم التقارير إلى مقدمي رأس املال.أ
Slide
1-16
LO 4 Identify the objectives of financial reporting.
Objective
Objective of
of Financial
Financial Accounting
Accounting
Review Question
General-purpose financial statements are prepared
primarily for:
a. internal users.
b. external users.
c. auditors.
d. government regulators.
:يتم إعداد البيانات املالية لألغراض العامة بشكل أساسي من أجل
. مستخدمني داخليني.أ
. مستخدمني خارجيني.ب
. املدققني.ج
. املنظمني الحكوميني.د
Slide
1-17
LO 4 Identify the objectives of financial reporting.
املنظمات التي تضع املعايير
Standard-Setting
Standard-Setting Organizations
Organizations
Two Major Organizations:
International Accounting Standards Board (IASB)
(IASB) مجلس معايير املحاسبة الدولية
Issues International Financial Reporting Standards
.(IFRS) إصدار املعايير الدولية إلعداد التقارير املالية
(IFRS).
Standards used on most foreign exchanges.
.املعايير املستخدمة في معظم البورصات األجنبية
Standards used by foreign companies listing on U.S.
.املعايير املستخدمة من قبل الشركات األجنبية املدرجة في بورصات األوراق املالية األمريكية
securities exchanges.
IFRS used in over 115 countries.
Slide
1-18
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
Two Major Organizations:
Financial Accounting Standards Board (FASB)
Issues Statements of Financial Accounting
Standards (SFAS).
Required for all U.S.-based companies.
(FASB) مجلس معايير املحاسبة املالية
.(SFAS) إصدار بيانات معايير املحاسبة املالية
.مطلوب لجميع الشركات التي تتخذ من الواليات املتحدة مقرا ً لها
Slide
1-19
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
International Organization of Securities
Commissions (IOSCO)
(IOSCO) املنظمة الدولية لهيئات األوراق املالية
Does not set accounting standards.
Dedicated to ensuring that global
markets can operate in an efficient
and effective basis.
.مكرسة لضمان أن األسواق العاملية يمكن أن تعمل على أساس كفاءة وفعالية
Slide
1-20
http://www.iosco.org/
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
International Accounting Standards Board (IASB)
Composed of four organizations—
تتألف من أربع منظمات-
International Accounting Standards
Committee Foundation (IASCF)
( مؤسسة لجنة معايير املحاسبة الدوليةIASCF)
International Accounting Standards
( مجلس معايير املحاسبة الدوليةIASB)
Board (IASB)
http://www.iasb.org
Standards Advisory Council املجلس االستشاري للمعايير
International Financial Reporting
Interpretations Committee (IFRIC)
Slide
1-21
( لجنة تفسيرات التقارير املالية الدوليةIFRIC)
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
Illustration 1-4
International Standard-Setting Structure
Slide
1-22
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
Review Question
IFRS stands for:
a. International Federation of Reporting Services.
b. Independent Financial Reporting Standards.
c. International Financial Reporting Standards.
d. Integrated Financial Reporting Services.
Slide
1-23
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
Review Question
The major key players on the international side are the:
a. IASB and FASB.
b. SEC and FASB.
c. IOSCO and the SEC.
d. IASB and IOSCO.
Slide
1-24
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
Review Question
Which body from the U.S. side is similar to the IASB?
a. SEC.
b. FASB.
c. FASC.
d. FAF.
Slide
1-25
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Due
Due Process
Process
The IASB due process has the following elements:
:تشتمل اإلجراءات القانونية الواجبة لدى مجلس معايير املحاسبة الدولية على العناصر التالية
1. Independent standard-setting board;
لوحة وضع املعايير املستقلة ؛
2. Thorough and systematic process for developing
عملية شاملة ومنهجية لتطوير املعايير ؛
standards;
3. Engagement with investors, regulators, business leaders,
and the global accountancy profession at every stage of
املشاركة مع املستثمرين واملنظمني وقادة األعمال ومهنة املحاسبة العاملية في كل مرحلة من مراحل العملية ؛ و
the process; and
4. Collaborative efforts with the worldwide standard-setting
.جهود تعاونية مع مجتمع وضع املعايير في جميع أنحاء العالم
community.
Slide
1-26
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Due
Due Process
Process
Illustration 1-4
International
Standard-Setting
Structure
Slide
1-27
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Due
Due Process
Process
Review Question
Accounting standard-setters use the following process in
establishing international standards: :يستخدم واضعو املعايير املحاسبية العملية التالية في وضع املعايير الدولية
a. Research, exposure draft, discussion paper, standard.
b. Discussion paper, research, exposure draft, standard.
c. Research, preliminary views, discussion paper,
standard.
d. Research, discussion paper, exposure draft, standard.
. معيار، مسودة عرض، ورقة مناقشة، بحث
Slide
1-28
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
أنواع التصريحات
Types
Types of
of Pronouncements
Pronouncements
Issued by the IASB:
:صادر عن مجلس معايير املحاسبة الدولية
International Financial Reporting Standards.
Framework for financial reporting.
.املعايير الدولية إلعداد التقارير املالية
.إطار عمل التقارير املالية
.تفسيرات التقارير املالية الدولية
International financial reporting interpretations.
Slide
1-29
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Types
Types of
of Pronouncements
Pronouncements
Hierarchy of IFRS
Companies first look to:
التسلسل الهرمي للمعايير الدولية إلعداد التقارير املالية
ً تنظر الشركات أو
:ال إلى
. معايير التقارير املالية الدولية.1
و. معايير املحاسبة الدولية.2
.(SIC) ( أو لجنة التفسيرات الدائمة السابقةIFRIC) التفسيرات الصادرة عن لجنة تفسيرات التقارير املالية الدولية.3
1. International Financial Reporting Standards;
2. International Accounting Standards; and
3. Interpretations originated by the International Financial
Reporting Interpretations Committee (IFRIC) or the
former Standing Interpretations Committee (SIC).
Slide
1-30
LO 6 Explain the meaning of IFRS.
Types
Types of
of Pronouncements
Pronouncements
Review Question
IFRS is comprised of:
:تتكون املعايير الدولية إلعداد التقارير املالية من
a. International Financial Reporting Standards and FASB
financial reporting standards.
b. International Financial Reporting Standards, International
Accounting Standards, and international accounting
.معايير التقارير املالية الدولية ومعايير املحاسبة الدولية وتفسيرات املحاسبة الدولية
interpretations.
c. International Accounting Standards and international
accounting interpretations.
d. FASB financial reporting standards and International
Accounting Standards.
Slide
1-31
LO 6 Explain the meaning of IFRS.
تحديات إعداد التقارير املالية
Financial
Financial Reporting
Reporting Challenges
Challenges
املعايير الدولية إلعداد التقارير املالية في بيئة سياسية
IFRS in a Political Environment
Slide
1-32
Illustration 1-6
User Groups that Influence the
Formulation of Accounting Standards
LO 7 Describe the challenges facing financial reporting.
Financial
Financial Reporting
Reporting Challenges
Challenges
The Expectations Gap
What the public thinks accountants should do vs. what
accountants think they can do.
فجوة التوقعات
.ما يعتقد الجمهور أن املحاسبني يجب أن يفعلوه مقابل ما يعتقد املحاسبون أنهم يستطيعون فعله
Significant Financial Reporting Issues
Non-financial measurements
Forward-looking information
قضايا التقارير املالية الهامة
القياسات غير املالية
معلومات تطلعية
فرز األصول
توقيت
Sort assets
Timeliness
Slide
1-33
LO 7 Describe the challenges facing financial reporting.
Financial
Financial Reporting
Reporting Challenges
Challenges
Ethics in the Environment of Financial Accounting
Companies that concentrate on “maximizing the bottom
line,” “facing the challenges of competition,” and
“stressing short-term results” place accountants in an
environment of conflict and pressure.
IFRS does not always provide an answer.
Doing the right thing is not always easy or obvious.
األخالق في بيئة املحاسبة املالية
و، “ و “مواجهة تحديات املنافسة، “الشركات التي تركز على “تعظيم الحد األقصى
.”التأكيد على النتائج قصيرة األجل” تضع املحاسبني في بيئة من الصراع والضغط
.ال تقدم املعايير الدولية إلعداد التقارير املالية إجابة دائًما
.إن القيام بالشيء الصحيح ليس باألمر السهل أو الواضح دائًما
Slide
1-34
LO 7 Describe the challenges facing financial reporting.
Financial
Financial Reporting
Reporting Challenges
Challenges
International Convergence
In 2002 the IASB and the FASB formalized their commitment
to the convergence of U.S. GAAP and international
standards. The Boards agreed to:
1. Make their existing financial reporting standards fully
converged as soon as practicable, and
2. Coordinate their future work programs to ensure that
once achieved, convergence is maintained.
التقارب الدولي
( بإضفاء الطابع الرسمي على التزامهما بتقارب مبادئ املحاسبة املقبولةFASB) ( وIASB) قام مجلس معايير املحاسبة الدولية، 2002 في عام
: وافق املجالس على.عموما ً في الواليات املتحدة واملعايير الدولية
و، جعل معايير التقارير املالية الحالية متقاربة تماًما في أقرب وقت ممكن عملًيا.1
. تنسيق برامج عملهم املستقبلية لضمان الحفاظ على التقارب بمجرد تحقيقه.2
Slide
1-35
LO 7 Describe the challenges facing financial reporting.
Financial
Financial Reporting
Reporting Challenges
Challenges
Review Question
The expectations gap is:
a. what financial information management provides and
what users want.
b. what the public thinks accountants should do and what
accountants think they can do.
c. what the governmental agencies want from standardsetting and what the standard-setters provide.
d. what the users of financial statements want from the
government and what is provided.
Slide
1-36
LO 7 Describe the challenges facing financial reporting.
Slide
1-37
The fact that there are differences between IFRS and U.S. GAAP
should not be surprising because standard-setters have developed
standards in response to different user needs.
IFRS tends to be simpler and more flexible in its accounting and
disclosure requirements.
The U.S. SEC recently eliminated the need for foreign companies
that trade shares in U.S. markets to reconcile their accounting with
U.S. GAAP.
Appendix 1A
THE U.S. STANDARD-SETTING ENVIRONMENT
Organizations responsible for developing financial
accounting standards (GAAP) in the United States:
1. Securities and Exchange
Commission (SEC).
2. Financial Accounting
Standards Board (FASB).
Slide
1-38
http://www.sec.gov/
http://www.fasb.org/
Securities
Securities and
and Exchange
Exchange Commission
Commission
Established by federal government
Accounting and reporting for public companies
Securities
SecuritiesAct
Act
of
of 1933
1933
Securities
SecuritiesAct
Act
of
of 1934
1934
Encouraged private standard-setting body
SEC requires public companies to adhere to GAAP
SEC Oversight
Enforcement Authority
Slide
1-39
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
Wheat Committee’s recommendations resulted in the creation of a the
Financial Accounting Standards Board (FASB) in 1973.
Slide
1-40
Financial
Accounting
Foundation
Selects members of the FASB
Funds their activities
Exercises general oversight.
Financial
Accounting
Standards Board
Mission to establish and improve
standards of financial accounting
and reporting.
Financial
Financial Accounting
Accounting
Standards
Standards Advisory
Advisory
Council
Consult on major policy issues.
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
Missions is to establish and improve standards of financial
accounting and reporting. Differences between FASB and
APB include:
Smaller Membership
Full-time, Remunerated Membership
Greater Autonomy
Increased Independence
Broader Representation
Slide
1-41
LO 6 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
Due Process
FASB relies on two basic premises:
(1)
Responsive to entire economic community
(2)
Operate in full view of the public
Step 1 = Topic placed on agenda
Step 2 = Research conducted and Discussion Memorandum issued.
Step 3 = Public hearing
Step 4 = Board evaluates research, public response and issues
Exposure Draft
Step 5 = Board evaluates responses and issues final Statement of
Financial Accounting Standard
Slide
1-42
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
Types of Pronouncements
Standards, Interpretations, and Staff Positions.
Financial Accounting Concepts
Emerging Issues Task Force Statements
Slide
1-43
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
U.S. Generally Accepted Accounting Principles
Principles that have substantial authoritative support.
Major sources of GAAP:
FASB Standards, Interpretations, and Staff Positions
APB Opinions
AICPA Accounting Research Bulletins
When the Board approves a new standard, staff position, etc., the results are
included in the Codification through an Accounting Standards Update.
Slide
1-44
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
Illustration 1A-2
The
Codification
Framework
Slide
1-45
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
International
International Accounting
Accounting Convergence
Convergence
Improvements in Accounting Standards
IASB and FASB have set up an extensive work plan to achieve
one set of international standards.
Illustration 1A-3
IFRS Adoption Timeline
Slide
1-46
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
International
International Accounting
Accounting Convergence
Convergence
SEC Work Plan
Sufficient development and application of IFRS.
Independent standard-setting for the benefit of investors.
Investor understanding and education.
Regulatory environment.
Impact on large and small financial statement preparers.
Human capital readiness.
Slide
1-47
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Copyright
Copyright
Copyright © 2011 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Copyright Act without the
express written permission of the copyright owner is unlawful.
Request for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The purchaser
may make back-up copies for his/her own use only and not for
distribution or resale. The Publisher assumes no responsibility for
errors, omissions, or damages, caused by the use of these
programs or from the use of the information contained herein.
Slide
1-48
Purchase answer to see full
attachment
Assignment (1)
Deadline: Saturday 8/10/2022 @ 23:59
Course Name: Financial Accounting
Student’s Name:
Course Code: ACCT 201
Student’s ID Number:
Semester: 1st
CRN:
Academic Year: 1444 H
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
/15
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.
College of Administration and Finance Sciences
Assignment Question(s):
(Marks 15)
Q1. a. Globalization demands a single set of high-quality international accounting standards.
Explain at least 5 elements that demands a single set of high-quality international accounting
standards. (Mark 1)
b. Name the two major organizations that sets standards and explain the due processes of
setting a new accounting standard? Please write one paragraph. (Mark 1)
Q2. An adjusting journal entry is typically made just prior to issuing a company’s financial statements.
What do you understand by adjusting entries? Give examples (Marks 2)
Q3. Presented below is information related to CHO Co. for the month of January 2018.
Cost of Goods Sold
Freight-out
Insurance expense
Rent expense
Dividends
202,000
7,000
12,000
20,000
1,000
Salary expense
Sales discount
Sales returns and allowances
Sales
61,000
8,000
13,000
340,000
Instructions: Prepare the closing entries. (Marks 4)
Q4. The retained earnings statement of XYZ Corporation on 31st December 2021 had the
following balances:
Balance, January 1
SAR 165,000
Net income
35,000
Dividends
(20,000)
Balance, December 31
$
180,000
However, before issuing the report for the year ended December 31, 2021, it discover a SAR
20,000 error undervalued inventory that overstated the net income to be higher in 2020 and
overvalued depreciation amount of $5,000 which understated net income in 2020. How would
College of Administration and Finance Sciences
this discovery have an impact on the reporting of the Statement of Retained Earnings for
2021? ? (Marks 3)
Q5. a. Presented below is the adjusted trial balance of Abdullah Corporation at December 31,
2020.
Accounts Payable
10,000
Wages Payable
500
Unearned Service Revenue
2,000
Bonds Payable, due 2017
9,000
Share Capital – Ordinary
10,000
Share premium
2000
Retained Earnings
20,000
Net loss
2500
Required: Prepare a classified section on Equity and Liabilities. (Marks 3)
b. What are the requirements of IFRS for a complete set of financial statements be presented
annually? (Mark 1)
Slide
1-1
CHAPTER
1
FINANCIAL REPORTING AND
ACCOUNTING STANDARDS
Intermediate Accounting
IFRS Edition
Kieso, Weygandt, and Warfield
Slide
1-2
Learning
Learning Objectives
Objectives
1.
Identify the major financial statements and other means of
تحديد البيانات املالية الرئيسية وغيرها من وسائل إعداد التقارير املالية.
financial reporting.
2.
Explain how accounting assists in the efficient use of scarce
اشرح كيف تساعد املحاسبة في االستخدام الفعال للموارد النادرة.
resources.
3.
Explain the need for high-quality standards.
اشرح الحاجة إلى معايير عالية الجودة.
4.
Identify the objective of financial reporting.
تحديد الهدف من التقارير املالية.
Slide
1-3
5.
Identify the major policy-setting bodies and their role in the
standard-setting process.
تحديد هيئات وضع السياسات الرئيسية ودورها في عملية وضع املعايير.
6.
Explain the meaning of IFRS.
7.
Describe the challenges facing financial reporting.
اشرح معنى املعايير الدولية إلعداد التقارير املالية.
صف التحديات التي تواجه التقارير املالية.
Financial
Financial Reporting
Reporting and
and Accounting
Accounting Standards
Standards
Global Markets
Financial
statements and
financial reporting
Accounting and
capital allocation
املحاسبة وتخصيص رأس املال
High-quality
standards
معايير الجودة العالية
Objective of
Financial
Reporting
General-purpose
financial statements
البيانات املالية لألغراض العامة
Capital providers
مقدمو رأس املال
املنظمات التي تضع املعايير
Financial
Reporting
Challenges
Standard-Setting
Organizations
IOSCO
Political
environment
IASB
Hierarchy of IFRS
بيئة سياسية
Expectations gap
Entity perspective التسلسل الهرمي للمعايير الدولية إلعداد التقارير املالية
منظور الكيان
Decision-usefulness
قرار فائدة
فجوة التوقعات
Significant financial
reporting issues
قضايا إعداد التقارير املالية الهامة
Ethics
أخالق مهنية
International
convergence
التقارب الدولي
Slide
1-4
Global
Global Markets
Markets
World markets are becoming increasingly intertwined.
أصبحت األسواق العاملية متشابكة بشكل متزايد.
Top 20 Global Companies In Terms Of Sales
شركة عاملية من حيث املبيعات20 أفضل
Slide
1-5
Global
Global Markets
Markets
Significant number of foreign companies are found on
national exchanges.
Illustration 1-2
تم العثور على عدد كبير من الشركات األجنبية في البورصات الوطنية.
Slide
1-6
International Exchange
Statistics
Global
Global Markets
Markets
Financial Statements and Financial Reporting
Characteristics of accounting are: خصائص املحاسبة هي:
(1)
Slide
1-7
the identification, measurement, and communication
of financial information about
(2)
economic entities to
(3)
interested parties.
تحديد وقياس و إبالغ املعلومات املالية حول
(2) الكيانات االقتصادية ل
(3) األطراف املهتمة.
LO 1 Identify the major financial statements and other means of financial reporting.
Global
Global Markets
Markets
Economic Entity
Financial Statements
Additional Information
Financial
Information
Statement of
Financial Position
President’s letter
Accounting?
Identify
and
Measure
and
Communicate
بيان املركز املالي
Income Statement
or Statement of
Comprehensive
Income
بيان الدخل أو بيان الدخل الشامل
Statement of Cash
Flows
بيان التدفقات النقدية
Statement of
Changes in Equity
بيان التغيرات في حقوق امللكية
Note Disclosures
إفصاحات املالحظة
Slide
1-8
رسالة الرئيس
Prospectuses
نشرة االكتتاب
Reports filed with
governmental
agencies
رفع التقارير للجهات الحكومية
News releases
النشرات اإلخبارية
Forecasts
التنبؤ
Environmental
impact statements
بيانات التأثير البيئي
Etc.
LO 1 Identify the major financial statements and other means of financial reporting.
Global
Global Markets
Markets
Accounting and Capital Allocation
املحاسبة وتخصيص رأس املال
Resources are limited. Efficient use of resources often
determines whether a business thrives.
. غالبًا ما يحدد االستخدام الفعال للموارد ما إذا كانت الشركة تزدهر أم ال.املوارد محدودة
Slide
1-9
Illustration 1-3
Capital Allocation Process
LO 2 Explain how accounting assists in the efficient use of scare resources.
Global
Global Markets
Markets
High Quality Standards
Globalization demands a single set of high-quality
international accounting standards. Some elements:
: بعض العناصر.تتطلب العوملة مجموعة واحدة من معايير املحاسبة الدولية عالية الجودة
1. Single set of high-quality accounting standards established by
a single standard-setting body. .مجموعة واحدة من معايير املحاسبة عالية الجودة التي وضعتها هيئة واحدة لوضع املعايير
2. Consistency in application and interpretation.
3. Common disclosures.
.االتساق في التطبيق والتفسير
.اإلفصاحات الشائعة
4. Common high-quality auditing standards and practices.
.معايير وممارسات تدقيق مشتركة عالية الجودة
5. Common approach to regulatory review and enforcement.
6. Education and training of market participants.
.نهج مشترك للمراجعة التنظيمية واإلنفاذ
.تعليم وتدريب املشاركني في السوق
Slide
1-10
(Continued)
LO 3 Explain the need for high-quality standards.
Global
Global Markets
Markets
High Quality Standards
Globalization demands a single set of high-quality
international accounting standards. Some elements:
7. Common delivery systems (e.g., eXtensible Business
Reporting Language—XBRL). .(XBRL – لغة إعداد التقارير التجارية القابلة للتوسيع، أنظمة التسليم الشائعة )على سبيل املثال
8. Common approach to corporate governance and legal
نهج مشترك لحوكمة الشركات واألطر القانونية حول العالم
frameworks around the world
Slide
1-11
LO 3 Explain the need for high-quality standards.
Slide
1-12
LO 3 Explain the need for high-quality standards.
Objective
Objective of
of Financial
Financial Accounting
Accounting
Objective: Provide financial information about the reporting
entity that is useful to
present and potential equity investors,
lenders, and
other creditors
in making decisions in their capacity as capital providers.
توفير معلومات مالية حول الكيان املبّلغ عنه والتي تكون مفيدة ل:الهدف
املستثمرين الحاليني واملحتملني في األسهم
واملقرضني
والدائنني اآلخرين
في اتخاذ القرارات بصفتهم مقدمي رأس املال.
Slide
1-13
LO 4 Identify the objectives of financial reporting.
Objective
Objective of
of Financial
Financial Accounting
Accounting
General-Purpose Financial Statements
Provide financial reporting information to a wide variety
توفير معلومات التقارير املالية ملجموعة واسعة من املستخدمني.
of users.
Provide the most useful information possible at the
least cost.
قدم أكثر املعلومات املفيدة املمكنة بأقل تكلفة.
Capital Providers (Investors)
Investors are the primary user group.
(مقدمو رأس املال )املستثمرون
املستثمرون هم مجموعة املستخدمني األساسية.
Slide
1-14
LO 4 Identify the objectives of financial reporting.
Objective
Objective of
of Financial
Financial Accounting
Accounting
Entity Perspective
Companies viewed as separate and distinct from their owners.
.تعتبر الشركات منفصلة ومتميزة عن أصحابها
Decision-Usefulness
Investors are interested in assessing the company’s
يهتم املستثمرون بتقييم الشركة
1. ability to generate net cash inflows and
القدرة على توليد صافي التدفقات النقدية و
2. management’s ability to protect and enhance the
capital providers’ investments.
.قدرة اإلدارة على حماية وتعزيز استثمارات مقدمي رأس املال
Slide
1-15
LO 4 Identify the objectives of financial reporting.
Objective
Objective of
of Financial
Financial Accounting
Accounting
Review Question
The objective of financial reporting places most
emphasis on:
a. reporting to capital providers.
b. reporting on stewardship.
c. providing specific guidance related to specific
needs.
d. providing information to individuals who are
experts in the field.
:يركز الهدف من إعداد التقارير املالية بشكل أكبر على
تقديم التقارير إلى مقدمي رأس املال.أ
Slide
1-16
LO 4 Identify the objectives of financial reporting.
Objective
Objective of
of Financial
Financial Accounting
Accounting
Review Question
General-purpose financial statements are prepared
primarily for:
a. internal users.
b. external users.
c. auditors.
d. government regulators.
:يتم إعداد البيانات املالية لألغراض العامة بشكل أساسي من أجل
. مستخدمني داخليني.أ
. مستخدمني خارجيني.ب
. املدققني.ج
. املنظمني الحكوميني.د
Slide
1-17
LO 4 Identify the objectives of financial reporting.
املنظمات التي تضع املعايير
Standard-Setting
Standard-Setting Organizations
Organizations
Two Major Organizations:
International Accounting Standards Board (IASB)
(IASB) مجلس معايير املحاسبة الدولية
Issues International Financial Reporting Standards
.(IFRS) إصدار املعايير الدولية إلعداد التقارير املالية
(IFRS).
Standards used on most foreign exchanges.
.املعايير املستخدمة في معظم البورصات األجنبية
Standards used by foreign companies listing on U.S.
.املعايير املستخدمة من قبل الشركات األجنبية املدرجة في بورصات األوراق املالية األمريكية
securities exchanges.
IFRS used in over 115 countries.
Slide
1-18
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
Two Major Organizations:
Financial Accounting Standards Board (FASB)
Issues Statements of Financial Accounting
Standards (SFAS).
Required for all U.S.-based companies.
(FASB) مجلس معايير املحاسبة املالية
.(SFAS) إصدار بيانات معايير املحاسبة املالية
.مطلوب لجميع الشركات التي تتخذ من الواليات املتحدة مقرا ً لها
Slide
1-19
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
International Organization of Securities
Commissions (IOSCO)
(IOSCO) املنظمة الدولية لهيئات األوراق املالية
Does not set accounting standards.
Dedicated to ensuring that global
markets can operate in an efficient
and effective basis.
.مكرسة لضمان أن األسواق العاملية يمكن أن تعمل على أساس كفاءة وفعالية
Slide
1-20
http://www.iosco.org/
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
International Accounting Standards Board (IASB)
Composed of four organizations—
تتألف من أربع منظمات-
International Accounting Standards
Committee Foundation (IASCF)
( مؤسسة لجنة معايير املحاسبة الدوليةIASCF)
International Accounting Standards
( مجلس معايير املحاسبة الدوليةIASB)
Board (IASB)
http://www.iasb.org
Standards Advisory Council املجلس االستشاري للمعايير
International Financial Reporting
Interpretations Committee (IFRIC)
Slide
1-21
( لجنة تفسيرات التقارير املالية الدوليةIFRIC)
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
Illustration 1-4
International Standard-Setting Structure
Slide
1-22
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
Review Question
IFRS stands for:
a. International Federation of Reporting Services.
b. Independent Financial Reporting Standards.
c. International Financial Reporting Standards.
d. Integrated Financial Reporting Services.
Slide
1-23
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
Review Question
The major key players on the international side are the:
a. IASB and FASB.
b. SEC and FASB.
c. IOSCO and the SEC.
d. IASB and IOSCO.
Slide
1-24
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Standard-Setting
Standard-Setting Organizations
Organizations
Review Question
Which body from the U.S. side is similar to the IASB?
a. SEC.
b. FASB.
c. FASC.
d. FAF.
Slide
1-25
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Due
Due Process
Process
The IASB due process has the following elements:
:تشتمل اإلجراءات القانونية الواجبة لدى مجلس معايير املحاسبة الدولية على العناصر التالية
1. Independent standard-setting board;
لوحة وضع املعايير املستقلة ؛
2. Thorough and systematic process for developing
عملية شاملة ومنهجية لتطوير املعايير ؛
standards;
3. Engagement with investors, regulators, business leaders,
and the global accountancy profession at every stage of
املشاركة مع املستثمرين واملنظمني وقادة األعمال ومهنة املحاسبة العاملية في كل مرحلة من مراحل العملية ؛ و
the process; and
4. Collaborative efforts with the worldwide standard-setting
.جهود تعاونية مع مجتمع وضع املعايير في جميع أنحاء العالم
community.
Slide
1-26
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Due
Due Process
Process
Illustration 1-4
International
Standard-Setting
Structure
Slide
1-27
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Due
Due Process
Process
Review Question
Accounting standard-setters use the following process in
establishing international standards: :يستخدم واضعو املعايير املحاسبية العملية التالية في وضع املعايير الدولية
a. Research, exposure draft, discussion paper, standard.
b. Discussion paper, research, exposure draft, standard.
c. Research, preliminary views, discussion paper,
standard.
d. Research, discussion paper, exposure draft, standard.
. معيار، مسودة عرض، ورقة مناقشة، بحث
Slide
1-28
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
أنواع التصريحات
Types
Types of
of Pronouncements
Pronouncements
Issued by the IASB:
:صادر عن مجلس معايير املحاسبة الدولية
International Financial Reporting Standards.
Framework for financial reporting.
.املعايير الدولية إلعداد التقارير املالية
.إطار عمل التقارير املالية
.تفسيرات التقارير املالية الدولية
International financial reporting interpretations.
Slide
1-29
LO 5 Identify the major policy-setting bodies and
their role in the standard-setting process.
Types
Types of
of Pronouncements
Pronouncements
Hierarchy of IFRS
Companies first look to:
التسلسل الهرمي للمعايير الدولية إلعداد التقارير املالية
ً تنظر الشركات أو
:ال إلى
. معايير التقارير املالية الدولية.1
و. معايير املحاسبة الدولية.2
.(SIC) ( أو لجنة التفسيرات الدائمة السابقةIFRIC) التفسيرات الصادرة عن لجنة تفسيرات التقارير املالية الدولية.3
1. International Financial Reporting Standards;
2. International Accounting Standards; and
3. Interpretations originated by the International Financial
Reporting Interpretations Committee (IFRIC) or the
former Standing Interpretations Committee (SIC).
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1-30
LO 6 Explain the meaning of IFRS.
Types
Types of
of Pronouncements
Pronouncements
Review Question
IFRS is comprised of:
:تتكون املعايير الدولية إلعداد التقارير املالية من
a. International Financial Reporting Standards and FASB
financial reporting standards.
b. International Financial Reporting Standards, International
Accounting Standards, and international accounting
.معايير التقارير املالية الدولية ومعايير املحاسبة الدولية وتفسيرات املحاسبة الدولية
interpretations.
c. International Accounting Standards and international
accounting interpretations.
d. FASB financial reporting standards and International
Accounting Standards.
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LO 6 Explain the meaning of IFRS.
تحديات إعداد التقارير املالية
Financial
Financial Reporting
Reporting Challenges
Challenges
املعايير الدولية إلعداد التقارير املالية في بيئة سياسية
IFRS in a Political Environment
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1-32
Illustration 1-6
User Groups that Influence the
Formulation of Accounting Standards
LO 7 Describe the challenges facing financial reporting.
Financial
Financial Reporting
Reporting Challenges
Challenges
The Expectations Gap
What the public thinks accountants should do vs. what
accountants think they can do.
فجوة التوقعات
.ما يعتقد الجمهور أن املحاسبني يجب أن يفعلوه مقابل ما يعتقد املحاسبون أنهم يستطيعون فعله
Significant Financial Reporting Issues
Non-financial measurements
Forward-looking information
قضايا التقارير املالية الهامة
القياسات غير املالية
معلومات تطلعية
فرز األصول
توقيت
Sort assets
Timeliness
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1-33
LO 7 Describe the challenges facing financial reporting.
Financial
Financial Reporting
Reporting Challenges
Challenges
Ethics in the Environment of Financial Accounting
Companies that concentrate on “maximizing the bottom
line,” “facing the challenges of competition,” and
“stressing short-term results” place accountants in an
environment of conflict and pressure.
IFRS does not always provide an answer.
Doing the right thing is not always easy or obvious.
األخالق في بيئة املحاسبة املالية
و، “ و “مواجهة تحديات املنافسة، “الشركات التي تركز على “تعظيم الحد األقصى
.”التأكيد على النتائج قصيرة األجل” تضع املحاسبني في بيئة من الصراع والضغط
.ال تقدم املعايير الدولية إلعداد التقارير املالية إجابة دائًما
.إن القيام بالشيء الصحيح ليس باألمر السهل أو الواضح دائًما
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1-34
LO 7 Describe the challenges facing financial reporting.
Financial
Financial Reporting
Reporting Challenges
Challenges
International Convergence
In 2002 the IASB and the FASB formalized their commitment
to the convergence of U.S. GAAP and international
standards. The Boards agreed to:
1. Make their existing financial reporting standards fully
converged as soon as practicable, and
2. Coordinate their future work programs to ensure that
once achieved, convergence is maintained.
التقارب الدولي
( بإضفاء الطابع الرسمي على التزامهما بتقارب مبادئ املحاسبة املقبولةFASB) ( وIASB) قام مجلس معايير املحاسبة الدولية، 2002 في عام
: وافق املجالس على.عموما ً في الواليات املتحدة واملعايير الدولية
و، جعل معايير التقارير املالية الحالية متقاربة تماًما في أقرب وقت ممكن عملًيا.1
. تنسيق برامج عملهم املستقبلية لضمان الحفاظ على التقارب بمجرد تحقيقه.2
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1-35
LO 7 Describe the challenges facing financial reporting.
Financial
Financial Reporting
Reporting Challenges
Challenges
Review Question
The expectations gap is:
a. what financial information management provides and
what users want.
b. what the public thinks accountants should do and what
accountants think they can do.
c. what the governmental agencies want from standardsetting and what the standard-setters provide.
d. what the users of financial statements want from the
government and what is provided.
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1-36
LO 7 Describe the challenges facing financial reporting.
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1-37
The fact that there are differences between IFRS and U.S. GAAP
should not be surprising because standard-setters have developed
standards in response to different user needs.
IFRS tends to be simpler and more flexible in its accounting and
disclosure requirements.
The U.S. SEC recently eliminated the need for foreign companies
that trade shares in U.S. markets to reconcile their accounting with
U.S. GAAP.
Appendix 1A
THE U.S. STANDARD-SETTING ENVIRONMENT
Organizations responsible for developing financial
accounting standards (GAAP) in the United States:
1. Securities and Exchange
Commission (SEC).
2. Financial Accounting
Standards Board (FASB).
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1-38
http://www.sec.gov/
http://www.fasb.org/
Securities
Securities and
and Exchange
Exchange Commission
Commission
Established by federal government
Accounting and reporting for public companies
Securities
SecuritiesAct
Act
of
of 1933
1933
Securities
SecuritiesAct
Act
of
of 1934
1934
Encouraged private standard-setting body
SEC requires public companies to adhere to GAAP
SEC Oversight
Enforcement Authority
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1-39
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
Wheat Committee’s recommendations resulted in the creation of a the
Financial Accounting Standards Board (FASB) in 1973.
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1-40
Financial
Accounting
Foundation
Selects members of the FASB
Funds their activities
Exercises general oversight.
Financial
Accounting
Standards Board
Mission to establish and improve
standards of financial accounting
and reporting.
Financial
Financial Accounting
Accounting
Standards
Standards Advisory
Advisory
Council
Consult on major policy issues.
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
Missions is to establish and improve standards of financial
accounting and reporting. Differences between FASB and
APB include:
Smaller Membership
Full-time, Remunerated Membership
Greater Autonomy
Increased Independence
Broader Representation
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1-41
LO 6 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
Due Process
FASB relies on two basic premises:
(1)
Responsive to entire economic community
(2)
Operate in full view of the public
Step 1 = Topic placed on agenda
Step 2 = Research conducted and Discussion Memorandum issued.
Step 3 = Public hearing
Step 4 = Board evaluates research, public response and issues
Exposure Draft
Step 5 = Board evaluates responses and issues final Statement of
Financial Accounting Standard
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1-42
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
Types of Pronouncements
Standards, Interpretations, and Staff Positions.
Financial Accounting Concepts
Emerging Issues Task Force Statements
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1-43
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
U.S. Generally Accepted Accounting Principles
Principles that have substantial authoritative support.
Major sources of GAAP:
FASB Standards, Interpretations, and Staff Positions
APB Opinions
AICPA Accounting Research Bulletins
When the Board approves a new standard, staff position, etc., the results are
included in the Codification through an Accounting Standards Update.
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1-44
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Financial
Financial Accounting
Accounting Standards
Standards Board
Board
Illustration 1A-2
The
Codification
Framework
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1-45
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
International
International Accounting
Accounting Convergence
Convergence
Improvements in Accounting Standards
IASB and FASB have set up an extensive work plan to achieve
one set of international standards.
Illustration 1A-3
IFRS Adoption Timeline
Slide
1-46
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
International
International Accounting
Accounting Convergence
Convergence
SEC Work Plan
Sufficient development and application of IFRS.
Independent standard-setting for the benefit of investors.
Investor understanding and education.
Regulatory environment.
Impact on large and small financial statement preparers.
Human capital readiness.
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1-47
LO 8 Identify the major policy-setting bodies and their
role in the standard-setting process.
Copyright
Copyright
Copyright © 2011 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Copyright Act without the
express written permission of the copyright owner is unlawful.
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programs or from the use of the information contained herein.
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