ICAB AL Case Study flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Revenue recognition five steps

Under IFRS 15 the entity identifies the contract, identifies distinct performance obligations, determines the transaction price, allocates it to obligations, and recognises revenue when each obligation is satisfied.

Recoverable amount

Under IAS 36, the higher of an asset's fair value less costs of disposal and its value in use; carrying amount must not exceed this figure.

Provision recognition criteria

Under IAS 37 a provision is recognised only when a present obligation exists, an outflow of resources is probable, and the amount can be estimated reliably.

Deferred tax measurement

Under IAS 12, deferred tax is measured at the rates expected to apply when the temporary difference reverses, using rates enacted or substantively enacted by the reporting date.

Lease liability initial measurement

Under IFRS 16, the lease liability is the present value of lease payments not paid at commencement, discounted at the implicit rate or the incremental borrowing rate.

Goodwill under IFRS 3

Consideration transferred plus non-controlling interest less net identifiable assets acquired; it is not amortised but is tested for impairment at least annually.

Research versus development

Under IAS 38, research expenditure is expensed as incurred, while development expenditure is capitalised only when prescribed feasibility and benefit criteria are all met.

Adjusting events

Under IAS 10, events after the reporting period that provide evidence of conditions existing at the reporting date require adjustment to the financial statements.

Earnings per share formula

Under IAS 33, basic EPS equals profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding during the period.

Audit risk model

Audit risk equals inherent risk multiplied by control risk multiplied by detection risk; detection risk is the component the auditor controls through the nature, timing, and extent of procedures.

Sufficient appropriate evidence

Under ISA 500, evidence must be sufficient in quantity and appropriate in relevance and reliability; externally sourced documentary evidence is generally more reliable than internally generated evidence.

Modified audit opinions

Under ISA 700 an opinion is qualified, adverse, or a disclaimer; a qualified opinion arises when a misstatement or scope limitation is material but not pervasive.

Going concern material uncertainty

Under ISA 570, when a material uncertainty exists the auditor includes a separate section describing it and still expresses an unmodified opinion.

Performance materiality

Under ISA 320, an amount set below overall materiality to reduce to an appropriately low level the probability that uncorrected misstatements exceed materiality.

Sampling risk

Under ISA 530, the risk that the auditor's conclusion based on a sample differs from the conclusion that would be reached using the entire population.

Key audit matters

Under ISA 701, matters communicated with those charged with governance that were significant to the audit, reported for listed entities to enhance communicative value.

Significant internal control deficiencies

Under ISA 265, deficiencies significant enough to merit attention by those charged with governance must be communicated in writing on a timely basis.

Audit documentation assembly

Under ISA 230, the final audit file is assembled within a defined period after the report date and must not be deleted before the retention period ends.

Income tax heads

Bangladesh income tax assesses income under heads including salaries, interest on securities, house property, agriculture, business or profession, capital gains, and other sources.

Withholding tax obligations

The deductor must deduct tax at source, deposit it with the government within the prescribed time, and furnish a certificate to the deductee.

VAT input credit

VAT is a multi-stage tax on supplies; a registered person offsets input tax paid on purchases against output tax charged on supplies.

Capital gains computation

The taxable gain is consideration received on transfer less the cost of acquisition and allowable improvement costs, taxed under the capital gains head.

Annual general meeting timing

Under the Companies Act, the annual general meeting is generally held within six months of the financial year end and within fifteen months of the previous meeting.

Statutory auditor appointment

The auditor is appointed by shareholders at the annual general meeting and reports whether the accounts give a true and fair view.

Arm's length principle

Transactions between associated enterprises must be priced as they would be between independent parties, supported by transfer pricing documentation.

Porter's five forces

Competitive rivalry, threat of new entrants, threat of substitutes, bargaining power of buyers, and bargaining power of suppliers shape industry profitability.

Ansoff matrix

Four growth options ordered by risk: market penetration, product development, market development, and diversification, the last being highest risk.

Fundamental ethical principles

The IFAC Code requires integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour from all professional accountants.

Self-interest threat

A financial or other interest inappropriately influences judgement, for example a large fee dependency on one client or a contingent fee arrangement.

Familiarity threat

A close relationship with a client makes the auditor too sympathetic to its interests, such as long association of senior personnel with the engagement.

Intimidation threat

The auditor is deterred from acting objectively by actual or perceived pressure, such as a threat of litigation or of replacement by the client.

Confidentiality disclosure exceptions

Client information may be disclosed only with consent, where required by law, or where there is a professional duty or right to disclose.