Acca f3 Financial Accounting (int) Study Text

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2: The regulatory framework   Part A  The context and purpose of financial reporting 

3.1 Standard setting process 

The IASB prepares IFRSs in accordance with 

due process. You do not need to know this for your exam, 

but the following diagram may be of interest. 

The procedure can be summarised as follows. 

 Consultative 

Group 

   

 

 

 

 Board 

 

 

 

On acceptance 

 

Steering Committee (chaired 

by board members) 

Discussion document 

 

 

 

8 Board members approval

  

 

Exposure draft 

 

 

 

 

8 Board members approval

 IFRS 

 

3.1.1 Current IASs/IFRSs 

The current list is as follows. Those examinable in Paper F3 are highlighted*. 

IAS 1* 

Presentation of financial statements 

IAS 2* 

Inventories

IAS 7* 

Statement of cash flows 

IAS 8* 

Accounting policies, changes in accounting estimates and errors 

IAS 10* 

Events after the reporting period 

IAS 11 

Construction contracts 

IAS 12 

Income taxes 

IAS 16* 

Property, plant and equipment 

IAS 17 

Leases

IAS 18* 

Revenue

IAS 19 

Employee benefits 

IAS 20 

Accounting for government grants and disclosure of government assistance 

IAS 21 

The effects of changes in foreign exchange rates 

IAS 23 

Borrowing costs 

IAS 24 

Related party disclosures 

IAS 27 

Consolidated and separate financial statements 

IAS 28 

Investments in associates 

IAS 29 

Financial reporting in hyperinflationary economies 

IAS 31 

Interests in joint ventures 

IAS 32 

Financial instruments: presentation 

IAS 33 

Earnings per share 

IAS 34 

Interim financial reporting 

IAS 36 

Impairment of assets 

IAS 37* 

Provisions, contingent liabilities and contingent assets 

IAS 38* 

Intangible assets 

IAS 39 

Financial instruments: recognition and measurement 

IAS 40 

Investment property 

IAS 41 

Agriculture

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Part A  The context and purpose of financial reporting

  2:  The regulatory framework

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Notes

IAS 37 

Only paragraphs 10, 27-35, 85-92, Appendices A and B are examinable in so far as they 

relate to contingent liabilities and contingent assets 

IAS 38 

Only paragraphs 7, 39-47, 55, 79, 88, 107 and 115 relating to R & D are examinable 

Framework for the Preparation and Presentation of Financial Statements* 

IFRS 1 

First time adoption of International Financial Reporting Standards 

IFRS 2 

Share based payment 

IFRS 3 

Business combinations 

IFRS 5 

Non-current assets held for sale and discontinued operations 

IFRS 6 

Exploration for the evaluation of mineral resources 

IFRS 7 

Financial Instruments: disclosures 

IFRS 8 

Operating segments 

Various exposure drafts and discussion papers are currently at different stages within the IFRS process, 

but these are not of concern to you at this stage. By the end of your financial accounting studies, however, 

you will know all the standards, exposure drafts and discussion papers! 

Question

Standards 1 

Why do you think that those standards highlighted above have been included in your syllabus? 

Answer

These standards affect the content and format of almost all financial statements. You therefore need to 

know about them in order to prepare a basic set of accounts. Most of the other standards will only affect 

larger and more complex organisations. 

3.2 Interpretation of IASs/IFRSs – IFRIC 

The IASB has now also developed a procedure for issuing interpretations of its standards. In March 2002 

the International Financial Reporting Interpretations Committee (IFRIC) was set up. 

The IFRIC will consider accounting issues that are likely to receive divergent or unacceptable treatment in 

the absence of authoritative guidance. Its review will be within the context of existing IASs/IFRSs and the 

IASB Framework.

The IFRIC will deal with issues of reasonably widespread importance, and not issues of concern to only a 

small set of enterprises. The interpretations will cover both: 

(a)

Mature issues (unsatisfactory practice within the scope of existing standards). 

(b)

Emerging issues (new topics relating to an existing standard but not actually considered when the 

standard was developed). 

In developing interpretations, the 11-person IFRIC will work closely with similar national committees. If it 

reached consensus on an interpretation the IFRIC will ask the Board to approve the interpretation for 

issue. Interpretations will be formally published after approval by the Board. 

3.3 Scope and application of IASs and IFRS 

3.3.1 Scope 

Any limitation of the applicability of a specific IAS or IFRS is made clear within that standard. IASs/IFRSs 

are

not intended to be applied to immaterial items, nor are they retrospective. Each individual standard 

lays out its scope at the beginning of the standard. 

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