Quiz: Conceptual Framework for Financial Reporting Joint World Bank and IFRS Foundation ‘train the trainers’ workshop hosted by the ECCB, 30 April to 4 May 2012 K The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation. © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Quiz: purpose of the Conceptual Framework for Financial Reporting Question 1: The purpose of the Conceptual Framework for Financial Reporting is: to assist the IASB in setting IFRSs? to assist preparers of financial statements in applying IFRSs? to assist auditors in forming an opinion on whether financial statements comply with IFRSs? to assist users of financial statements in interpreting IFRS financial statements? all of the above? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Quiz: purpose of the Conceptual Framework for Financial Reporting Question 1: The purpose of the Conceptual Framework for Financial Reporting is: to assist the IASB in setting IFRSs? to assist preparers of financial statements in applying IFRSs? to assist auditors in forming an opinion on whether financial statements comply with IFRSs? to assist users of financial statements in interpreting IFRS financial statements? all of the above? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Quiz: objective of general purpose of financial reporting Question 2: The objective of general purpose financial reporting is: provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity? to inform government statistics? to support the entity’s tax return? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Quiz: objective of general purpose of financial reporting Question 2: The objective of general purpose financial reporting is: to meet all the information needs of all the users of an entity’s financial statements? to inform economic decision-making by a broad range of users (including managers, investors, creditors and prudential regulators)? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Quiz: objective of general purpose of financial reporting Question 2: The objective of general purpose financial reporting is: provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity? to inform government statistics? to support the entity’s tax return? to meet all the information needs of all the users of an entity’s financial statements? to inform economic decision-making by a broad range of users (including managers, investors, creditors and prudential regulators)?

Quiz: objective of general purpose financial reporting 7 Question 3: Which of the following could most closely be associated with the objective of financial reporting: have a bias toward understating assets and income and overstating liabilities and expenses? transparency and neutrality? financial stability through conservatism/prudence? management discretion in reporting financial information? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 7

Quiz: objective of general purpose financial reporting 8 Question 3: Which of the following could most closely be associated with the objective of financial reporting: have a bias toward understating assets and income and overstating liabilities and expenses? transparency and neutrality? financial stability through conservatism/prudence? management discretion in reporting financial information? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 8

Quiz: fundamental qualitative characteristics 9 Question 4: The fundamental qualitative characteristics are: comparability and relevance? relevance and reliability? relevance, reliability and comparability? relevance and faithful representation? comparability, relevance and faithful representation? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 9

Quiz: fundamental qualitative characteristics 10 Question 4: The fundamental qualitative characteristics are: comparability and relevance? relevance and reliability? relevance, reliability and comparability? relevance and faithful representation? comparability, relevance and faithful representation? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 10

Quiz: qualitative characteristics 11 Question 5: verifiability means knowledgeable and independent observers: would reach complete agreement that a depiction is a faithful representation? cannot reach consensus that a depiction is a faithful representation? could reach consensus, but not necessarily complete agreement, that a depiction is a faithful representation? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 11

Quiz: qualitative characteristics 12 Question 5: verifiability means knowledgeable and independent observers: would reach complete agreement that a depiction is a faithful representation? cannot reach consensus that a depiction is a faithful representation? could reach consensus, but not necessarily complete agreement, that a depiction is a faithful representation? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 12

Quiz: qualitative characteristics 13 Question 6: which statement/s are true? Relevance is a fundamental qualitative characteristic. Financial information without both relevance and faithful representation is not useful. Financial information without both relevance and faithful representation cannot be made useful by being more comparable, verifiable, timely or understandable. 13

Quiz: qualitative characteristics 14 Question 6: which of the statements below are true? Financial information that is relevant and faithfully represented may still be useful even if it does not have any of the enhancing qualitative characteristics All of the above statements. None of the above statements. © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 14

Quiz: qualitative characteristics 15 Question 6: which of the statements below are true? Financial information that is relevant and faithfully represented may still be useful even if it does not have any of the enhancing qualitative characteristics All of the above statements. None of the above statements. © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 15

at the discretion of management? Quiz: recognition 16 Question 7: Expenses are recognised in comprehensive income (profit or OCI): using the matching basis—on the basis of a direct association between the costs incurred and the earning of specific items of income? using the accrual basis—items are recognised as assets, liabilities, equity, income or expenses when they satisfy the definitions and recognition criteria for those items? at the discretion of management? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 16

at the discretion of management? Quiz: recognition 17 Question 7: Expenses are recognised in comprehensive income (profit or OCI): using the matching basis—on the basis of a direct association between the costs incurred and the earning of specific items of income? using the accrual basis—items are recognised as assets, liabilities, equity, income or expenses when they satisfy the definitions and recognition criteria for those items? at the discretion of management? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 17

Quiz: uncertain future cash flows 18 Question 8: Recognition criteria determine when to recognise an item. Measurement is determining the monetary amounts at which to measure an item. Uncertainties about the extent of future cash flows: only affect the decision about whether to recognise? only affect the estimation of the amount at which to measure the item? could affect both recognition and measurement? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 18

Quiz: uncertain future cash flows 19 Question 8: Recognition criteria determine when to recognise an item. Measurement is determining the monetary amounts at which to measure an item. Uncertainties about the extent of future cash flows: only affect the decision about whether to recognise? only affect the estimation of the amount at which to measure the item? could affect both recognition and measurement? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 19

two—historical cost and fair value Quiz: measurement 20 Question 9: How many measurement bases does IFRSs specify for the measurement of assets? one—historical cost one—fair value two—historical cost and fair value many—including historical cost, fair value, value in use, estimated selling price less costs to complete and sell, etc © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 20

two—historical cost and fair value Quiz: measurement 21 Question 9: How many measurement bases does the IFRSs specify for the measurement of assets? one—historical cost one—fair value two—historical cost and fair value many—including historical cost, fair value, value in use, estimated selling price less costs to complete and sell, etc © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 21

Quiz: status of Conceptual Framework 22 Question 10: the Conceptual Framework: is an IFRS? overrides all other IFRS requirements? does not define standards for any particular measurement or disclosure issue? is in the hierarchy that management must in the absence of a specific IFRS requirement apply in developing an accounting policy that results in information that is relevant? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 22

Quiz: status of Conceptual Framework 23 Question 10: the Conceptual Framework: is an IFRS? overrides all other IFRS requirements? does not define standards for any particular measurement or disclosure issue? is in the hierarchy that management must in the absence of a specific IFRS requirement apply in developing an accounting policy that results in information that is relevant? © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 23

Questions or comments? 24 Expressions of individual views by members of the IASB and its staff are encouraged. The views expressed in this presentation are those of the presenter. Official positions of the IASB on accounting matters are determined only after extensive due process and deliberation. © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 24

25 25 The requirements are set out in International Financial Reporting Standards (IFRSs), as issued by the IASB at 1 January 2012 with an effective date after 1 January 2012 but not the IFRSs they will replace. The IFRS Foundation, the authors, the presenters and the publishers do not accept responsibility for loss caused to any person who acts or refrains from acting in reliance on the material in this PowerPoint presentation, whether such loss is caused by negligence or otherwise. © 2011 IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK | www.ifrs.org © IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org 25