Current Issues and

Question 1

What is the process of amending standards as set out by the IASB?

Answer 1

1) Set a RESEARCH PROPOSAL: analyse possible financial reporting problems and solutions, consider broader financial reporting issues such as the involvement to deal with international matters
2) Issue a DISCUSSION PAPER: gather thoughts
3) Develop a PROPOSAL and an EXPOSURE DRAFT: account for public comments
4) Redevelop the PROPOSAL: consider feedback and potentially amend or reissue the proposal
5) Finalise proposal and prepare standard for voting by board
6) PAST IMPLEMENTATION REVIEW: happens 2 to 3 years after the effective date

Question 2

Why would the IASB amend a standard?

Answer 2

• to improve the understanding of the standard
• to remove any ambiguity from the standard
• to clarify the disclosures
• to reflect changes in market/ industry

Question 3

What are the guiding principles for ?

Answer 3

STRATEGIC FOCUS/ FUTURE ORIENTATION: How does the business’ strategy create value over the short-, medium- and long term?
CONNECTIVITY OF INFORMATION: Which interdependancies between factors affect the business’ ability to create value?
STAKEHOLDER RELATIONSHIPS: Nature and quality of stakeholder relationships and how the business responds to their needs and interests
MATERIALITY: Which matters have a substantial impact on the business’ ability to create value?
CONCISENESS: should be concise
CONSISTENCY and COMPARABILITY: over time, with other organisations
RELIABILITY and COMPLETENESS: includes all material matters without material error

Question 4

What are the Capitals?

Answer 4

Financial
Manufactured
Human
Social
Rekationships
Natural
Intellectual

Question 5

Explain Financial Capital

Answer 5

• pool of funds to use in production/ provision of goods/services
• obtained through financing or generated from operations
• increased through profits, decreased through losses

Question 6

Explain Manufactured Capital

Answer 6

• physical objects for use in production of goods, e.g. buildings
• increase through building a factory

Question 7

Explain Intellectual Capital

Answer 7

• organisational knowledge-based intangibles such as patents, systems,procedures etc.
• increase by buying a patent

Question 8

Explain Human Capital

Answer 8

• people’s competencies, capabilities, experiences and motivation to innovate
• increased through better training

Question 9

Explain social and relationship capital

Answer 9

• relationships between communities, SHs etc.
• social license to operate
  Increased through charity work, volunteering, donations

Question 10

Explain Natural Capital

Answer 10

• renewable and non-renewable environmental resources used to provide goods/ services
• increased if new source discovered

Question 11

What are the objectives of ?

Answer 11

1. Improve information quality: financial capitalproviders can allocate funds more effecient/ productive
2. Provide a more cohesive approach: communicate full range of factors that affect value creation
3. Enhanced accountability and stewardship: consider interdependancies of capitals
4. Support decision-making over short-, medium- and long term

Question 12

What are the content elements?

Answer 12

• no specific structure, elements should be covered somewhere in report:
  ORGANISATIONAL OVERVIEW AND EXTERNAL ENVIRONMENT - business activities, circumstances
  GOVERNANCE - how does governance structure support value creation?
  BUSINESS MODEL
  RISKS AND OPPORTUNITIES that affect value creation
  STRATEGY AND RESOURCE ALLOCATION where does the business want to go and how will it get there?
  PERFORMANCE achieved business objectives for period?
  OUTLOOK
  BASIS OF PREPARATION AND PRESENTATION