PIPFA Final Level key terms

Accounting standards issued by the IASB and notified by SECP for mandatory application in Pakistan, forming the basis of corporate financial reporting for listed and large entities.

The overriding requirement that financial statements present faithfully the entity's financial position and performance, departing from a specific standard only where compliance would be misleading, with disclosure.

The Securities and Exchange Commission of Pakistan, the corporate regulator that administers the Companies Act, regulates listed companies and market intermediaries, and notifies accounting and auditing requirements.

The auditor's formal conclusion on whether financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework; may be unmodified, qualified, adverse or a disclaimer.

The assumption that an entity will continue operating for the foreseeable future without liquidation or forced cessation; management assesses it and the auditor evaluates the assessment for material uncertainty.

The threshold above which omissions or misstatements could reasonably influence economic decisions of users; it is judged both quantitatively and qualitatively and drives disclosure and audit scope decisions.

Requirements to disclose transactions, balances and relationships with parties able to exercise control or significant influence, so users can assess whether results reflect arm's-length terms.

Combining the financial statements of a parent and its controlled subsidiaries into a single set, eliminating intragroup balances, transactions and unrealised profits, to show the group as one economic entity.

The equity in a subsidiary not attributable, directly or indirectly, to the parent; presented separately within consolidated equity and allocated its share of profit or loss and other comprehensive income.

The excess of consideration transferred plus the non-controlling interest over the fair value of identifiable net assets acquired; not amortised but tested annually for impairment.

Reduction of an asset's carrying amount to its recoverable amount when the latter is lower, with the loss recognised in profit or loss except where reversal is prohibited, as for goodwill.

Tax recognised on temporary differences between the carrying amount of assets and liabilities and their tax base, and on unused tax losses, measured at expected reversal rates.

A liability of uncertain timing or amount recognised when a present obligation from a past event probably requires an outflow that can be reliably estimated.

A possible obligation whose existence depends on uncertain future events, or a present obligation not recognised because outflow is not probable or cannot be measured reliably; disclosed unless remote.

Allocating the transaction price to performance obligations and recognising revenue when control of promised goods or services transfers to the customer, over time or at a point.

Recognition by lessees of a right-of-use asset and lease liability for most leases, with exemptions for short-term and low-value leases, replacing the former operating/finance distinction.

The system of rules, practices and processes by which a company is directed and controlled, covering board composition, accountability, risk oversight and protection of shareholder interests.

A board committee of independent directors overseeing financial reporting, external and internal audit, and internal control, providing a check on management and reporting to the board.

The policies and procedures designed to provide reasonable assurance about reliability of reporting, effectiveness and efficiency of operations, and compliance with laws and regulations.

Managing current assets and liabilities, especially inventory, receivables and payables, to balance liquidity against profitability and to fund day-to-day operations efficiently.

Evaluating and selecting long-term investment projects using discounted cash flow techniques such as net present value and internal rate of return, alongside payback and risk considerations.

The minimum return required by providers of debt and equity, weighted by capital structure, used to discount project cash flows and to judge whether investments create value.

Examining how changes in volume, price, variable cost and fixed cost affect profit, using contribution margin and break-even points to support short-term decisions.

Setting predetermined costs for materials, labour and overhead and comparing them with actual results to produce variances that are analysed and used for control and performance evaluation.

Decomposing differences between standard and actual performance into price and quantity components, then investigating significant variances to identify causes and corrective action.

Decision-making using only future cash flows that differ between alternatives, excluding sunk costs and apportioned fixed overhead, and including opportunity costs of scarce resources.

The laws, systems and processes governing how public funds are budgeted, released, spent, accounted for and audited, aiming at fiscal discipline, allocative efficiency and operational performance.

Legislative authorisation of expenditure from the Consolidated Fund for a specified purpose and period, forming the legal limit within which the executive may incur spending.

The principal government account into which revenues are received and from which expenditure is made only under legislative authorisation; distinct from the Public Account.

The constitutional head of the supreme audit institution who audits receipts and expenditure of the federation and provinces and reports findings to the President for tabling in Parliament.

A legislative committee that examines audit reports and accounts of government, holds departments to account for irregularities, and recommends corrective and disciplinary action.

Audit of economy, efficiency and effectiveness of government programmes, assessing whether objectives were achieved and resources used well, beyond compliance with rules and legality.

The optimal use of resources to achieve intended outcomes, commonly assessed through the three Es of economy, efficiency and effectiveness in public spending decisions.

A reform approach applying private-sector techniques such as output-based budgeting, performance contracts and competition to public services to improve responsiveness and efficiency.

Budgeting that links resource allocation to measurable outputs and outcomes rather than only to inputs, supporting accountability for results achieved by spending units.

Recognising revenue when earned and expenses when incurred, and reporting assets and liabilities, rather than recording only cash receipts and payments as under cash accounting.

The rules and processes by which government acquires goods, works and services, requiring transparency, competition, value for money and documented evaluation of bids.

Systems and procedures within public entities to safeguard resources, ensure reliable reporting and compliance, and support achievement of programme objectives within the control environment.