ACC 406 EXAM 1 STUDY GUIDE (CHAPTER 11, 12, 8)
IFRS - Answer -International Financial Reporting Standards that are not used in the
U.S. and drive international reporting
IASC - Answer -created in 1973 in hopes of eliminating the diversity of principles used
throughout the world wit its primary objective to develop international accounting
standards or IASs. Early IASs followed a lowest common denominator approach,
meaning it gave two options to deal with differences
IASB - Answer -Followed the IASC; governed by the IFRS foundation. Comprised of 16
members who determine the international reporting set of standards1973 in
IASCO Agreement - Answer --A member of the IASC's Consultative Group that is
composed of the stock exchange regulators in more than 100 countries, including the
U.S. SEC
-Works to facilitate cross-border securities offerings and listing by multinational issuers
-In 1993, the two groups agreed up a list of "core standards to use in financial
statements of companies involved in cross border securities
IASs - Answer -Created by the IASC and then adopted by the IASB. 41 were issued by
the IASC from 1975 - 2001 and 17 were issued by the IFRS by the end of 2018.
-Standards issued by the IASB
-International accounting standards issued by the IASC
-Interpretations issued by the IFRS interpretations committee
-Interpretations issued by the Standing Interpretations Committee (and adopted by the
IASB) - Answer -Authoritative pronouncements that make up the IFRS (in order of
authority)
1. Apply the specifically relevant IFRS standards
2. Refer to other IFRS standards dealing with similar or related issues
3. Refer to definitions, recognition criteria, and measurement concepts in the IASB
Conceptual Framework
4. Consider the most recent pronouncement of other standard setting bodies that use a
similar conceptual framework, other accounting literature, and accepted industry
practice - Answer -IFRS Accounting Policy Hierarchy
Norwalk Agreement - Answer -FASB and IASB agreed to use their best efforts to:
-make their existing financial reporting standards fully compatible as soon as is
practicable and
-coordinate their work program to ensure that once achieved, compatibility is maintained
Convergence can occur by
-FASB adopting the IASB existing standard
, -IASB adopting the existing FASB standard
-The Boards working together to develop a new standard
FASB-IASB Convergence Changes - Answer -business combinations
discontinued operations
fair value options
joint ventures
revenue recognition
leases
borrowing costs
share-based payment
comprehensive income
segment reporting
fair value measurement
SEC's 2007 ruling - Answer -stated that company's using international standards no
longer had to provide U.S. GAAP information in their financial reports filed with the SEC
-Recognition differences (I.e. research and development costs -> under GAAP these
are expensed immediately but under IFRs they are recognized as an internally
generated asset which creates an intangible assets subject to amortization
-Measurement differences (contingent liabilities, PP&E costs, and bank overdrafts) -
Answer -Differences between IFRS and U.S. GAAP
SEC - Answer --Created in 1934 during a time of despair in the markets
-Created by an act of Congress and is responsible for ensuring complete and reliable
information and financials concerning publicly traded companies which are available for
investors
-Independent government agency
-Main mission is to protect investors, maintain fair and efficient markets, and facilitate
capital formation
-5 divisions and 23 offices
Securities Exchange Act of 1934 - Answer -Created and the SEC in a time of financial
market crisis in order to bring about full and fair disclosure of publicly traded companies'
financial information to protect investors and keep the economy stable
Referred to as the "truth in securities law" to regulate the initial offering of securities by a
company or underwriter issued by the SEC
-Headed by five commissioners appointed by the President with Senate consent
-Chairperson usually from same political party as president
-Only 4 out of 5 can belong to same political party
-Serve 5 year staggered terms - Answer -SEC commissioner information and rules
- 8-K, 10-K, and 10-Q and registration statement fees - Answer -Different fees the SEC
charges
IFRS - Answer -International Financial Reporting Standards that are not used in the
U.S. and drive international reporting
IASC - Answer -created in 1973 in hopes of eliminating the diversity of principles used
throughout the world wit its primary objective to develop international accounting
standards or IASs. Early IASs followed a lowest common denominator approach,
meaning it gave two options to deal with differences
IASB - Answer -Followed the IASC; governed by the IFRS foundation. Comprised of 16
members who determine the international reporting set of standards1973 in
IASCO Agreement - Answer --A member of the IASC's Consultative Group that is
composed of the stock exchange regulators in more than 100 countries, including the
U.S. SEC
-Works to facilitate cross-border securities offerings and listing by multinational issuers
-In 1993, the two groups agreed up a list of "core standards to use in financial
statements of companies involved in cross border securities
IASs - Answer -Created by the IASC and then adopted by the IASB. 41 were issued by
the IASC from 1975 - 2001 and 17 were issued by the IFRS by the end of 2018.
-Standards issued by the IASB
-International accounting standards issued by the IASC
-Interpretations issued by the IFRS interpretations committee
-Interpretations issued by the Standing Interpretations Committee (and adopted by the
IASB) - Answer -Authoritative pronouncements that make up the IFRS (in order of
authority)
1. Apply the specifically relevant IFRS standards
2. Refer to other IFRS standards dealing with similar or related issues
3. Refer to definitions, recognition criteria, and measurement concepts in the IASB
Conceptual Framework
4. Consider the most recent pronouncement of other standard setting bodies that use a
similar conceptual framework, other accounting literature, and accepted industry
practice - Answer -IFRS Accounting Policy Hierarchy
Norwalk Agreement - Answer -FASB and IASB agreed to use their best efforts to:
-make their existing financial reporting standards fully compatible as soon as is
practicable and
-coordinate their work program to ensure that once achieved, compatibility is maintained
Convergence can occur by
-FASB adopting the IASB existing standard
, -IASB adopting the existing FASB standard
-The Boards working together to develop a new standard
FASB-IASB Convergence Changes - Answer -business combinations
discontinued operations
fair value options
joint ventures
revenue recognition
leases
borrowing costs
share-based payment
comprehensive income
segment reporting
fair value measurement
SEC's 2007 ruling - Answer -stated that company's using international standards no
longer had to provide U.S. GAAP information in their financial reports filed with the SEC
-Recognition differences (I.e. research and development costs -> under GAAP these
are expensed immediately but under IFRs they are recognized as an internally
generated asset which creates an intangible assets subject to amortization
-Measurement differences (contingent liabilities, PP&E costs, and bank overdrafts) -
Answer -Differences between IFRS and U.S. GAAP
SEC - Answer --Created in 1934 during a time of despair in the markets
-Created by an act of Congress and is responsible for ensuring complete and reliable
information and financials concerning publicly traded companies which are available for
investors
-Independent government agency
-Main mission is to protect investors, maintain fair and efficient markets, and facilitate
capital formation
-5 divisions and 23 offices
Securities Exchange Act of 1934 - Answer -Created and the SEC in a time of financial
market crisis in order to bring about full and fair disclosure of publicly traded companies'
financial information to protect investors and keep the economy stable
Referred to as the "truth in securities law" to regulate the initial offering of securities by a
company or underwriter issued by the SEC
-Headed by five commissioners appointed by the President with Senate consent
-Chairperson usually from same political party as president
-Only 4 out of 5 can belong to same political party
-Serve 5 year staggered terms - Answer -SEC commissioner information and rules
- 8-K, 10-K, and 10-Q and registration statement fees - Answer -Different fees the SEC
charges
