Chapter 3 The regulatory framework

Test Your Understanding

1 Which of the following statements is/are true?

(1) The IFRS Interpretations Committee is a forum for the IASB to consult with the outside
world.
(2) The IFRS Foundation produces IFRSs. The IFRS Foundation is overseen by the IASB.
(3) One of the objectives of the IFRS Foundation is to bring about convergence of national
accounting standards and IFRSs.

A 1 and 3 only

B 2 only

C 2 and 3 only

D 3 only

2 Which, if any, of the following statements are true?

(1) International accounting standards are effective only if adopted by national

regulatory bodies.
(2) Accounting standards provide guidance on accounting for all types of transaction.

A (1) only

B (2) only

C (1) and (2)

D Neither (1) nor (2)

3 What is the role of the IFRS Interpretations Committee?

A To develop and issue a set of globally accepted International

Financial Reporting Standards
B To clarify issues in the application of IFRSs where unsatisfactory or
conflicting interpretations have developed

C To take account of the financial reporting needs of small and

medium-sized entities

D To provide a forum for the IASB to consult with the national

accounting standard setters, academics and other interested parties

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4 Which body is responsible for the issue of International Financial Reporting Standards?

A The IFRS Advisory Council

B The International Financial Reporting Interpretations Committee

C The International Accounting Standards Board

D The European Union

5 Which ONE of the following statements correctly describes how International Financial
Reporting Standards (IFRSs) should be used?

A To provide examples of best financial reporting practice for national

bodies who develop their own requirements
B To ensure high ethical standards are maintained by financial reporting
professionals internationally
C To facilitate the enforcement of a single set of global financial reporting
standards
D To prevent national bodies from developing their own financial reporting
standards

6 Which of the following items is the IFRS Advisory Council is responsible for?

(1) To give advice to the IASB or to the trustees.

(2) To give advice to the IASB on agenda decisions.

A (1) and (2)

B (1) only

C (2) only

D Neither (1) nor (2)

7 If an accounting standard is being applied inconsistently which accounting body will issue a
statement to clarify how the standard should be applied?

A The International Accounting Standards Board

B The International Financial Reporting Standards Foundation

C The International Financial Reporting Standards Interpretations Committee

D The International Financial Reporting Standards Advisory Council

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8 Which of the following organisations provides guidance to the International Accounting
Standards Board on the implications of proposed standards for users and preparers of financial
statements?

The International Federation of Accountants

The International Financial Reporting Standards Advisory Council

The International Financial Reporting Standards Foundation

The International Financial Reporting Standards Interpretations Committee

9 The body to which the International Accounting Standards Board is responsible is:

The Monitoring Board

The International Financial Reporting Standards Advisory Council

The International Financial Reporting Standards Foundation

The International Financial Reporting Standards Interpretations Committee

10 Which of the following bodies is involved is trying to achieve convergence of global accounting
standards?

The International Federation of Accountants

The International Financial Reporting Standards Advisory Council

The International Financial Reporting Standards Foundation

The International Financial Reporting Standards Interpretations Committee

11 Which of the following best describes the role of the International Financial Reporting
Standards Interpretations Committee?

Issues International Financial Reporting Standards

Interprets International Financial Reporting Standards

Investigates listed companies to ensure they comply with IFRS

Provides advice on the development of standards

12 “An entity which adopts international financial reporting standards must always adhere to the
requirements of every standard, no matter what the circumstances”.

True

False

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13 Which of the following statements is true?

The IFRS Interpretations Committee oversees the work of the IFRS Foundation

The IFRS Foundation develops and issues Interpretations.

The IFRS Advisory Council assists and advises the IASB in the process of
developing IFRSs
The IASB appoints the Trustees of the IFRS Foundation

14 What is the correct order for the process of issuing a new IFRS by the IASB?

Exposure Draft, Discussion Paper, Standard

Discussion Paper, Exposure Draft, Standard

Exposure Draft, Discussion Paper, Review

Discussion Paper, Standard

15 What is the objective of the International Accounting Standards Board?

To provide a form for participation by other interested parties that require transparent and
comparable information
To create accounting standards which meet the needs of emerging economies
To harmonise International Financial Reporting Standards with national accounting
standards
To develop, in the public interest, a single set of high quality, understandable global
accounting standards

16 Which body provides guidance on financial reporting issues that are no specifically address in IFRS?

the International Accounting Standards Board

the IFRS Advisory Council

the International Financial Reporting Standards Interpretations Committee

the International Financial Reporting Standards Foundation

17 One of the main advantages of standardisation in financial reporting is?

The production of prudent financial statements

The use of creative accounting practices

Comparability between accounting periods and between entities

Discussion Paper, Standard

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18 The role of the IFRS Advisory Council is to:

Inform the IASB of the Council's views on standard-setting projects

Interpret the application of international standards

Supervise the work of the IASB

Appoint members to the IASB

19 IFRS Advisory Council (IFRS AC) gives advice to the IASB on a range of issues which include:

the Practical application and implementation issues in projects

the IASB’s project timetable

the IASB’s agenda

All of the above

20 Interpretations by IFRS Interpretations Committee (IFRS IC) cover:

Newly identified financial reporting issues not specifically dealt with in IFRSs

Issues where unsatisfactory or conflicting interpretations have developed

Both

21 The word "entity" as used by the IASB refers to:

Not-for-profit organisations only

Profit-oriented organisations only

Companies only

Corporations only

Answer keys for chapter 3

Question 1: D Question 8: B Question 15: D
Question 2: A Question 9: C Question 16: C
Question 3: B Question 10: C Question 17: C
Question 4: C Question 11: B Question 18: A
Question 5: C Question 12: B Question 19: D
Question 6: A Question 13: C Question 20: C
Question 7: C Question 14: B Question 21: C

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