Module n° 1 - Page 1./ THE CONCEPTUAL FRAMEWORK: ACCOUNTING POLICIES AND CONVENTIONS INTERNATIONAL FINANCIAL REPORTING STANDARDS

Module n° 1 - Page 2./ Accrual basis of accounting, Going concern Faithful representation, Substance over form, Neutrality Prudence, Completeness, Comparability Understandability, Relevance, Materiality, Reliability  General Framework  The Preface and Framework set out: the objectives of the IFRS and financial disclosures the basic accounting principles and rules INTERNATIONAL FINANCIAL REPORTING STANDARDS

Module n° 1 - Page 3./ CONCEPTUAL FRAMEWORK  The objectives of the financial statements  The objectives of the financial statements are to provide information on the company’s financial position, performance and changes in financial position, which are useful to a wide range of users for making economic decisions.  The board of directors and/or another governing body is responsible for the preparation and presentation of the financial statements.

Module n° 1 - Page 4./  Underlying Assumptions  Accrual basis: Transactions are recorded and reported in the financial statements of the periods to which they relate.  Going concern: The enterprise will continue in operation for the foreseeable future. CONCEPTUAL FRAMEWORK

Module n° 1 - Page 5./  Qualitative characteristics of the financial statements  Understandability: The information should be understandable by users who have a basic knowledge of accounting and economics.  Relevance: The information may influence the economic decisions of users. It helps them to evaluate past, present or future events.  Materiality: The relevance of information is affected by its nature and materiality. The materiality depends more on the size of an item rather than being a qualitative characteristic that information must have if it is to be useful. CONCEPTUAL FRAMEWORK

Module n° 1 - Page 6./  Qualitative characteristics of the financial statements: reliability  Reliability: reliable information is free from material error and bias. It ensures the following: Faithful representation of the economic reality; Substance over form: information represents the economic reality and not only the legal form; Neutrality: it is free from bias; Prudence: inclusion of a degree of caution when making estimates and judgements; Completeness; Comparability: users should be able to compare. The presentation should be comprehensive and uniform. CONCEPTUAL FRAMEWORK

Module n° 1 - Page 7./  Constraints on providing relevant and reliable information:  Timeliness: information is provided on a timely basis;  Balance between benefit and cost: the benefits derived from information should exceed the cost of providing it. CONCEPTUAL FRAMEWORK

Module n° 1 - Page 8./  The elements of the financial statements  The elements directly related to the measurement of financial position are assets, liabilities and equity.  The elements directly related to the measurement of performance are income and expenses. The statement of changes in financial position reflects income statement elements and changes in balance sheet elements. CONCEPTUAL FRAMEWORK

Module n° 1 - Page 9./  The elements of the financial statements : assets, liabilities, equity  Elements related to the measurement of financial position: An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise. A liability is a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources exceeding economic benefits. Equity is assets less liabilities. CONCEPTUAL FRAMEWORK

Module n° 1 - Page 10./  The elements of the financial statements: income and expenses  Elements related to the measurement of performance: Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants. Expenses are decreases in economic benefits during the accounting period, in the form of outflows or depreciations of assets or increases in liabilities that result in decreases in equity, other than those relating to distributions to equity participants. CONCEPTUAL FRAMEWORK

Module n° 1 - Page 11./  Recognition of the elements of the financial statements  To be recognised, an element must meet these two conditions: It is probable that any future economic benefit associated with the item will flow to or from the enterprise The item has a cost or value that can be measured with reliability. CONCEPTUAL FRAMEWORK