Podcast
Questions and Answers
What is a key factor in determining materiality according to the accounting profession?
What is a key factor in determining materiality according to the accounting profession?
- Historical cost
- Market trends
- Regulatory standards
- User's decision (correct)
The accounting profession has no experience in providing assurance for sustainability reporting.
The accounting profession has no experience in providing assurance for sustainability reporting.
False (B)
What does SR stand for in the context of sustainability?
What does SR stand for in the context of sustainability?
Sustainability Reporting
The AP's involvement in sustainability reporting has led to the consolidation of various ______ frameworks.
The AP's involvement in sustainability reporting has led to the consolidation of various ______ frameworks.
Match the following components of the accounting profession with their descriptions:
Match the following components of the accounting profession with their descriptions:
Which of the following describes a concern regarding book vs market values?
Which of the following describes a concern regarding book vs market values?
Sustainability reporting should be approached on a voluntary basis by companies.
Sustainability reporting should be approached on a voluntary basis by companies.
What is the ultimate obligation of the AP?
What is the ultimate obligation of the AP?
What is NOT a characteristic of non-GAAP earnings?
What is NOT a characteristic of non-GAAP earnings?
All versions of income in financial statements are considered equally reliable.
All versions of income in financial statements are considered equally reliable.
What is the primary concern of auditors regarding 'one time' items?
What is the primary concern of auditors regarding 'one time' items?
The formal writing of the contingency standard allows management not to have to record contingent losses or disclose specific details of any litigation due to __________.
The formal writing of the contingency standard allows management not to have to record contingent losses or disclose specific details of any litigation due to __________.
Match the following terms with their correct descriptions:
Match the following terms with their correct descriptions:
What does the term 'not determinable' refer to in the context of contingencies?
What does the term 'not determinable' refer to in the context of contingencies?
The purpose of non-GAAP earnings is solely to provide value relevance.
The purpose of non-GAAP earnings is solely to provide value relevance.
What aspect of accounting is emphasized through the comment 'accounting is a social science'?
What aspect of accounting is emphasized through the comment 'accounting is a social science'?
Flashcards
What is Materiality in Sustainability Reporting?
What is Materiality in Sustainability Reporting?
The importance of the information to a user's decision-making process. Essential details that influence a user's choices about an organization.
What is the role of standard setting in Sustainability Reporting?
What is the role of standard setting in Sustainability Reporting?
The process of setting standards for sustainability reporting, providing clear guidelines for companies to follow.
What role does assurance play in Sustainability Reporting?
What role does assurance play in Sustainability Reporting?
The assurance provided by independent professionals to stakeholders that the sustainability information presented is reliable and trustworthy.
What is the difference between book value and market value of intangible assets?
What is the difference between book value and market value of intangible assets?
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Why is there concern about the gap between book value and market value of intangible assets?
Why is there concern about the gap between book value and market value of intangible assets?
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Should more intangible assets be recognized on the balance sheet?
Should more intangible assets be recognized on the balance sheet?
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What is disclosure of Intangibles?
What is disclosure of Intangibles?
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What are the challenges in estimating market values of intangible assets?
What are the challenges in estimating market values of intangible assets?
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What are Non-GAAP financial statements?
What are Non-GAAP financial statements?
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What is "due process" in standard setting?
What is "due process" in standard setting?
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What is the core concept of contingencies?
What is the core concept of contingencies?
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What is "Not Determinable" in contingencies?
What is "Not Determinable" in contingencies?
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What is Assurance?
What is Assurance?
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What is Value Relevance?
What is Value Relevance?
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What is "Managing Perceptions" in accounting?
What is "Managing Perceptions" in accounting?
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What is IFRS 18?
What is IFRS 18?
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Study Notes
CPA Profession: Painting a Financial Canvas
- The accounting profession has considerable experience in materiality assessments.
- Sustainability reporting frameworks were consolidated after the accounting profession's involvement.
- The profession's historical role in financial statement assurance can be applied to sustainability reporting.
- The accounting profession has a well-developed standard-setting process.
- The International Organization of Securities Commissions (IOSCO) endorsed IFRS standards for sustainability reporting.
- The public interest motivates engagement in sustainability initiatives.
BV vs. MV (Intangibles)
- Book values and market values frequently differ significantly.
- Intangible assets should potentially be reflected in balance sheets.
- Estimation errors associated with market values, particularly for whole firms and assets like brands and R&D, need consideration.
- Financial statement disclosures of market values might be either integrated or separate.
- Auditor concerns exist regarding the reporting of market values.
Non-GAAP
- Multiple versions of income in financial statements are potentially problematic.
- Non-GAAP accounting is not an objective measure, but rather is socially constructed.
- There is no single accurate way to measure income.
- The relevance of non-GAAP earnings versus managing perceptions is debated (using different frameworks, as per JAAF and JBE articles).
- Regulation from regulatory bodies, like SOX, versus professional standards vary.
Practice: What Colors Do I Use? How Wide Is the Canvas?
- Different colors for the canvas are considered and discussed.
- The overall scope and depth of the canvas are examined.
Assurance
- Assurance processes are discussed, relating to procedures in the due process for setting standards.
Standard Setting (Due Process)
- Conflicts in standard-setting processes are noted.
- Examples such as consultation papers, user consultation, and academic involvement are highlighted as part of the standard-setting process.
Contingencies
- The word "uncertainty" appears throughout contingency standards, impacting how these are operationalized.
- Contingencies involve uncertain events that may/may not occur and if they do may/may not have a monetary effect.
- Specific wording within standards relating to uncertainty is examined.
- There are instances of uncertainty where the likelihood of an event occurring is not determinable.
- Determining the likelihood of winning vs. losing in legal cases, including accuracy in estimating monetary amounts involved, are discussed as examples of uncertainty in contingency standards.
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