Intermediate Accounting Gaapifrs Clive Vlieland Boddy web site中级会计gaapifrs克莱夫弗利兰岛博迪网站.ppt

* * * Accounting Policies Estimates Dr. Clive Vlieland-Boddy FCA FCCA MBA * The Gray Area! * Accounting Not an exact science Requires subjective judgement Requires estimates * What Are Accounting Policies? * What are Accounting Policies? Recommended principals to assist with the orderly preparation of financial statements. Set by professional standard setters in each country as part of their GAAP/IFRS structure. They enable a high level of standardisation within reporting entities. Enables greater comparability. * Why do we need them? * The Objectives To minimise the areas where management have subjective judgement in preparing financial statements. To give guidance in areas where guess work was previously employed. Create standardisation of basic principals. * Principal Areas * Main Accounting Policies Depreciation – Recommended rates, useful lives and methods. Inventory- Recommended methods of valuation and FIFO or LIFO. Revenue Recognition – When and how to recognise revenues. Foreign Currency Rates of Conversion. * Important For: Basis of valuation of Derivative instruments. Risk management. Basis of Accounting estimates and judgements: Basis of valuation of NCA Goodwill Impairment Deferred Taxes Employee Benefits * Creative accounting The making of choices in order to present the impression desired by preparers Accountants may be “creative” in their: - Choice of accounting policies - Estimates or predictions - Disclosure - Timing of transactions * In Reality! Accounting is not passive score-keeping and accounting policy decisions are not neutral Contracting theory predicts that agents will choose the form of accounting that best serves their self-interest * Self Interest! Most say that “generally accepted accounting principles are those that have been found to be cost effective in limiting the harmful effects of the conflicting interests of the parties” Opportunistic behaviour cannot be eliminated as Enron and WorldCom in the United States, among ot