S1: An entity shall not describe financial statements as complying with PFRSS unless they comply with substantially all of the requirements of PFRS. S2: An entity whose financial statements comply with PFRS shall make an explicit and unreserved statement of such compliance in the notes to financial statements. S3: An entity can rectify inappropriate accounting policies either by disclosure of the accounting policies used or by notes or explanatory material. *

S1: An entity shall not describe financial statements as complying with PFRSS unless they comply with substantially all of the requirements of PFRS. S2: An entity whose financial statements comply with PFRS shall make an explicit and unreserved statement of such compliance in the notes to financial statements. S3: An entity can rectify inappropriate accounting policies either by disclosure of the accounting policies used or by notes or explanatory material. *

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter17: Other Services Provided By Audit Firms

Section: Chapter Questions

Problem 3TFQ

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4. Which statement is correct concerning compliance with PFRS?I An entity whose financial statements comply with PFRS shall make an explicit and unreserved statement of such compliance in the notes.II An entity shall not describe financial statements as complying with PFRS unless they comply with all the requirements of each applicable PFRS.a. I onlyb. II onlyc. Both I and IId. Neither I nor II 5. Which information is not included in the “notes to financial statements”?a. Statement of compliance with PFRSb. Statement of measurement basis and accounting policies usedc. Supporting computation for line items presented and aggregatedd. Cash Flows 6. These are defined as “the specific principles, methods, practices, rules, bases and conventions adopted by an entity in preparing and presenting financial statements.a. Contingencies and commitmentsb. Notes to financial statementsc. Nonfinancial disclosuresd. Accounting Policies
1. Which statement is incorrect regarding materiality judgments? A. An entity is only required to apply recognition and measurement equirements in PFRSS when the effect of applying them material. B. An entity need not provide a disclosure specified by a PFRS if the information resulting from that disclosure is not material. C. Public availability of information relieves an entity of the obligation to provide material information in its financial statements. D. It is inappropriate for the entity to make, or leave uncorrected, immaterial departures from PFRSs to achieve a particular presentation of its financial position, financial performance or cash flows. 2. Which of the following is an appropriate aggregation? A. Cash and cash equivalents (Cash in bank and sinking fund) B. Trade and other receivables (Accounts receivable and investment in bonds) C. Trade and other payables (Accounts payable and accruals) D. Provisions (Income tax payable and warranty liability) 3. Which of the…
Which of the following does not constitute fair presentation and compliance with IFRS? A) an entity apply IFRS, with additional disclosure when necessary. B) an entity rectify inappropriate accounting policies by additional disclosures. C) an entity did not selectively apply standards it likes. D) an entity follows the recognition criteria for assets, liabilities and expenses set out in the conceptual framework.
TRUE OR FALSE 1. The application of PFRSs, with additional discostire when necessary, is presumed to result in financial statements that achieve a fair presentation. 2. According to PAS 1, an entity shall make an explicit and unreserved statement of compliance with the PFRSs in the notes only if the entity complies with all the requirements of PFRSS. 3. PAS 1 encourages, but does not require, the presentation of the preceding year's financial statements as comparative information to the current year's financial statements. 4. According to PAS 1. assets and liabilities or income and expenses are offset, unless separate presentation is required or permitted by a PFRS 5. According to PAS 1, PFRSs apply to financial statements as well as to other information presented in an annual report a regulatory filing or another document. 6. According to PAS 1, the line item "Cash and cash equivalents" should always be presented first in the statement of financial position. 7. PAS1…
The following does not constitute fair presentation and compliance with IFRS:a) an entity rectify inappropriate accounting policies by additional disclosureb) an entity did not selectively apply standards it likesc) an entity follows the recognition criteria for assets, liabilities and expenses set out in the conceptual frameworkd) an entity apply IFRS, with additional disclosure when necessary
According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, an entity must select and apply its accounting policies consistently from one period to the next and among various items in the financial statements. However, an entity may change its accounting policies under certain conditions. Required: Identify the circumstances under which it may be appropriate to change accounting policy in accordance with the guidance given in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
Accdg. to PAS , related party disclosures are necessary * to indicate the possibility that an entity's financial position and performance might have been affected by the existence of such relationship because related party transactions may have resulted to assets and liabilities that were recognized in the financial statements of the reporting entity to notify users of financial statements of the fact that related party transactions may not have been made on arm's length basis in order to eliminate or minimize the effects of related party transactions on the FS of the reporting entity
According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, an entity must select and apply its accounting policies consistently from one period to the next and among various items in the financial statements. However, an entity may change its accounting policies under certain conditions.Identify the circumstances under which it may be appropriate to change accounting policy in accordance with the guidance given in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
Under IFRS, changes in accounting policies are a. permitted if the change will result in a more reliable and more relevant presentation of the financial statements. b. permitted if the entity encounters new transactions, events, or conditions that are substantively different from existing or previous transactions. c. required on material transactions, if the entity had previously accounted for similar, though immaterial, transactions under an unacceptable accounting method. d. required if an alternate accounting policy gives rise to a material change in assets, liabilities, or the current- year net income.
(a) Explain and give an example of the effect on a set of published financial statements if the going concern convention is held not to apply. (b) Explain in general terms what the IASB Conceptual Framework is trying to
S1: Control is the power to govern the financial and operating policies of anentity so as to obtain benefits from its activities. S2: Consolidated financialstatements shall be prepared using uniform accounting policies for liketransactions and other events in similar circumstances. A. Only S1 is correct.B. Only S2 is correct.C. Both statements are incorrect.D. Both statements are correct.
true or false According to PAS 19, an entity shall recognize the PV of DBO in its accounts and in its financial statements.