CPA
Foundation Leval
Financial Accounting November 2017
Suggested solutions

➢ These policies are typically set by the management of the company and may vary from one organization to another.

➢ Accounting policies include decisions about the valuation of assets and liabilities, recognition of revenue and expenses, and the disclosure of accounting information.

➢ Companies may choose accounting policies that best reflect their business operations and financial performance.

Accounting Standards:

➫ Accounting standards, on the other hand, are established rules and guidelines that are issued by relevant accounting standard-setting bodies or authorities, such as the Financial Accounting Standards Board (FASB) in the United States or the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

➫ Accounting standards provide a common framework for financial reporting, ensuring consistency and comparability of financial statements across different organizations.

➫ These standards dictate how various accounting transactions and events should be recorded, measured, and reported in financial statements.

➫ Compliance with accounting standards is often mandatory and legally required in many jurisdictions to ensure transparency and reliability in financial reporting.

Develop High-Quality International Financial Reporting Standards (IFRS):

The IFRS Foundation's core mission is to develop and promote a set of high-quality, globally accepted accounting standards, known as IFRS. These standards aim to provide transparent, consistent, and comparable financial information that facilitates informed decision-making by investors, creditors, and other stakeholders.

Global Adoption and Convergence:

The IFRS Foundation strives to achieve worldwide adoption and convergence of IFRS. This involves working with national standard-setters, regulators, and accounting bodies to encourage the adoption of IFRS in various countries. Convergence aims to harmonize accounting standards across jurisdictions and reduce differences between national and international accounting rules.

Promote Accountability and Transparency:

The IFRS Foundation promotes accountability and transparency in financial reporting. By establishing a robust framework for financial reporting, it helps enhance the trust and reliability of financial information provided by organizations to their stakeholders.

Protect Investor Interests:

The IFRS Foundation prioritizes the interests of investors and capital markets. It aims to ensure that financial statements prepared in accordance with IFRS provide relevant, reliable, and consistent information, thereby safeguarding the interests of investors who rely on this information for their investment decisions.

Facilitate Access to Global Capital Markets:

By promoting the use of IFRS, the IFRS Foundation facilitates access to global capital markets for companies and governments. Companies that use IFRS can access a wider pool of international investors, as IFRS is accepted in many countries and recognized by major stock exchanges.

Collaboration and Stakeholder Engagement:

The IFRS Foundation collaborates with various stakeholders, including standard-setting bodies, regulators, businesses, and investors, to develop and maintain IFRS. It seeks input and feedback from these stakeholders to ensure that the standards are relevant and responsive to the evolving needs of the global business environment.

Supporting Economic Growth and Stability:

The IFRS Foundation recognizes that transparent and consistent financial reporting is crucial for economic growth and stability. By providing a globally accepted accounting framework, it contributes to the development of efficient and resilient financial markets.

• Commitment and Leadership: Strong political commitment and leadership at the highest levels of government are essential. Government leaders should clearly communicate the importance of IPSAS adoption and set a strong example for compliance.
• Training and Capacity Building: Governments should invest in training and capacity-building programs for their finance and accounting personnel. This includes both initial training for those responsible for implementing IPSAS and ongoing training to keep staff updated on changes and best practices.
• Clear Implementation Plan: Developing a well-defined implementation plan with specific timelines and milestones is crucial. This plan should address the sequencing of standards adoption and allocate sufficient resources.
• Stakeholder Engagement: Engage with stakeholders, including internal government departments, external auditors, and the public. It is important to communicate the benefits of IPSAS adoption and address concerns or questions from stakeholders.
• Adaptation to Local Context: While IPSAS provides a common framework, governments should consider adapting the standards to their local context and specific needs. This might involve customizing chart of accounts, classifications, or financial reporting formats.
• Effective IT Systems: Governments should invest in modern and efficient information technology (IT) systems that can support IPSAS compliance. These systems should be capable of capturing, processing, and reporting financial data in line with IPSAS requirements.
• Regular Monitoring and Evaluation: Establish mechanisms for monitoring and evaluating the progress of IPSAS adoption. This can include internal and external audits to ensure compliance and identify areas for improvement.
• Technical Assistance and Support: Seek technical assistance and support from international organizations, standard-setting bodies, and experienced consultants who can provide guidance and expertise in implementing IPSAS.
• Change Management: Implement change management strategies to ensure that staff at all levels of government understand and accept the changes brought about by IPSAS adoption. This may involve communication, training, and incentives.
• Transparency and Accountability: Use IPSAS adoption as an opportunity to improve transparency and accountability in the public sector. Ensure that financial reports are made readily available to the public and that there are mechanisms for citizens to provide feedback and oversight.
• Legal Framework: Align the legal framework with IPSAS requirements, ensuring that the standards are backed by appropriate legislation and regulations.
• Peer Learning and Networking: Governments can benefit from sharing experiences and best practices with other countries that have successfully adopted IPSAS. Engaging in peer learning and networking can help overcome challenges and promote successful implementation.
• Sustainability: Consider the long-term sustainability of IPSAS adoption. Ensure that the resources and commitment necessary for maintaining compliance with the standards are in place over the years.