Стандарты финансовой отчетности в корпоративном бизнесе. Практикум на английском языке

МИНИCTEPCTBO ОБРАЗОВАНИЯ И НАУКИ РОССИЙСКОЙ ФЕДЕРАЦИИ

ФЕДЕРАЛЬНОЕ ГОСУДАРСТВЕННОЕ АВТОНОМНОЕ ОБРАЗОВАТЕЛЬНОЕ УЧРЕЖДЕНИЕ ВЫСШЕГО ОБРАЗОВАНИЯ

«СЕВЕРО-КАВКАЗСКИЙ ФЕДЕРАЛЬНЫЙ УНИВЕРСИТЕТ»

СТАНДАРТЫ ФИНАНСОВОЙ ОТЧЕТНОСТИ В КОРПОРАТИВНОМ БИЗНЕСЕ

ПРАКТИКУМ (на английском языке)

Направление подготовки 38.04.08 – Финансы и кредит Магистерская программа «Корпоративные финансы» Степень выпускника – Магистр

STANDARDS OF FINANCIAL REPORTING

IN CORPORATE BUSINESS

РRACTICAL TRAINING

Direction 38.04.08 – Finance and credit

Master programme «Corporate finance»

Qualification – Master

Ставрополь

2017

Рецензенты:

д-р экон. наук, доцент А. В. Савцова, д-р экон. наук, профессор Е. И. Костюкова

(Ставропольский государственный аграрный университет)

С76 Стандарты финансовой отчетности в корпоративном бизнесе:

практикум на англ. яз. / авт.-сост. Куницына Н. Н. – Ставрополь: Изд-во СКФУ, 2017. – 91 с.

Впособии изложены базовые теоретические аспекты дисциплины «Стандарты финансовой отчетности в корпоративном бизнесе», а также представлены практические задания и контрольные вопросы по всем темам дисциплины.

Предназначено для использования в учебном процессе при подготовке магистрантов направления 38.04.08 – Финансы и кредит, а также в системе переподготовки кадров высшей квалификации.

УДК 336.6(075.8) ББК 65.290-93 я73

Автор-составитель

д-р экон. наук, профессор Н. Н. Куницына

© ФГАОУ ВО «Северо-Кавказский федеральный университет», 2017

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Contents

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Introduction

The purpose of teaching discipline is forming of a set of generic (GC-3), subject-specific (SSC-1) and specific (SC-1) competences of master in the 38.04.08 – Finance and credit.

Tasks of teaching discipline are: a statement of the basic principles of IFRS, determination of their content; studying of the standards of IFRS applicable to the financial companies; studying of techniques of the financial reporting on IFRS; acquisition of skills of creation of the financial statement on IFRS; carrying out the analysis of the financial statement on IFRS; identification of problems and determination of prospects of application by the financial system.

Studying of discipline provides implementation of requirements of the Federal state educational standard in questions: reasons for the main directions of creation and analysis of the financial reporting, sequence and interrelation of their carrying out; possess acceptances of accounting and creation of the reporting according to the Russian rules and international standards; analysis of results of company’s activities; estimates of its financial condition.

The discipline "Standards of financial reporting in corporate business" belongs to disciplines at the basis part, obligatory disciplines. Students study this discipline in the 3rd term.

Practical training in discipline "Standards of financial reporting in corporate business" are carried out by master students of the direction 38.04.08 – Finance and credit, the program “Corporate finances” according to the Federal state educational standard of higher education in the direction 38.04.08 "Finance and credit" (Master degree), the curriculum and the program of discipline "Standards of financial reporting in corporate business".

Base for accomplishment of practical works are the theoretical knowledge and practical skills received during studying of disciplines "Actual problems of finance", "Financial controlling", "Financial analysis (advanced level)", "Investments and investment decisions".

Guidelines for practical training on discipline contain tasks to practical and seminar training on all topics of discipline "Standards of financial reporting in corporate business".

For the purpose of preparation for accomplishment of practical work the student shall study lecture material on a topic, the additional literature offered by the teacher.

Accomplishment of all practical works will allow the student in sufficient degree to understand questions of accounting of the main transactions and an order of the reporting creation according to requirements of International standards of financial reporting (IFRS).

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PRACTICAL WORKS

1. THEORETICAL BASES OF IFRS

The purpose is studying the theoretical bases of financial accounting and the financial reporting in world practice, and also studying of structure and the IFRS elements.

Knowledge and skills: students have to know: a role, essence and value Russian and the international accounting standards (IAS) applied in the organizations corporate to sectors; to be able: to determine and use in practice of difference of international standards of the financial reporting from the Russian rules of accounting and creation of the reporting; to master: skills of creation of the financial reporting in the Russian and international format.

1. Theoretical part

Financial statements are prepared and presented to external users by many companies around the world. Although such financial statements may appear similar from country to country, there are differences which have probably been caused by a variety of social, economic and legal circumstances and by different countries having in mind the needs of different users of financial statements when setting national requirements.

Financial statements are most commonly prepared in accordance with an accounting model based on recoverable historical cost and the nominal financial capital maintenance concept. Other models and concepts may be more appropriate in order to meet the objective of providing information that is useful for making economic decisions although there is at present no consensus for a change.

IFRS have advisory nature, and any country can independently make decisions on their use.

In the narrow sense of the word the IFRS are understood as the code of the standards developed by Council for international accounting standards (International financial reporting standards board, IASB). In the broadest sense – the national systems of accounting and the reporting which developed in the certain countries some of which are recognized also as other countries.

Purposes of creation of IFRS: improvement of quality of financial information for the benefit of users; unification of a basis of the financial reporting; enhancement of the procedures applied by preparation of financial statements.

2. Tasks

Task 1

To what principle or the characteristic of IFRS are examples corresponded?

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1)In December the company sells a part of goods on credit. The company receives a money from the buyer in February. Sale should be reflected in December, but not when a money is received.

2)In December the company makes the leasing payments from January to March. Leasing payments are distributed among the three months, but don't belong completely on an expense that month when lease was paid.

3)The company is engaged in constructing. Publication of reports of architects and land surveyors will be necessary if it confirms certain aspects of its work. Information, not all from users, will understand the specified reports, but, in case of desire, they will be able to use consultation of experts.

4)If the company conducts diversified activities, then submission of the reporting under each segment of economic activity can be useful to users.

5)Earlier the sphere of economic activity of the company was limited to the country. Then it expanded it, having begun activities in other country, on other continent, and intends to expand foreign activities and further. Though it perhaps isn't essential to economic activity today, informing on the achieved results and on plans for development of the new markets will help users to understand activities better.

6)The company can write off an asset in connection with a transfer of property on it to other party. At the same time, if there is an arrangement that the company will continue to receive economic benefits from an asset, then this operation was performed for the purpose of receive the funds using an asset as pledge. Under such circumstances write-off of an asset as sold will authentically not represent a transaction essence.

7)In the financial reporting data on contractual or contingent obligations can be lowered. The admittance card of such information can mislead users.

8)Application of various inventory costing methods (the IFRS allow use of the FIFO method or weighted average cost method leads to various financial results. Consecutive application of one method is extremely important to allow users to compare results of the different accounting periods. To change a method it is admissible only when the IFRS require or when it can help to users.

If other companies of the same industry use a certain accounting policy, then it will be useful for users if accounting policy of the company corresponds industry as it will allow to carry out adequate comparisons.

Task 2

The company has assets in the amount of 100 million Euros and the liability in the amount of 85 million Euros. Assess the equity value.

Task 3

1. Explain in what case it is necessary to reflect the property, plant and equipment leased as a part of assets.

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2.Whether the "know-how" received as a result of carrying out developments can answer determination of an asset?

3.The company placed the order for materials which will be delivered. Is it necessary to reflect materials as a part of assets?

3. Recommended literature: 1, 2, 3, 4, 5, 6, 7, 8, 14, 15.

2. TECHNIQUE OF THE FINANCIAL REPORTING

CREATION

The purpose is studying the qualitative characteristics of useful financial information which identify the types of information that are likely to be most useful to the existing and potential investors, lenders and other creditors for making decisions about the reporting entity on the basis of information in its financial report (financial information).

Knowledge and skills: students have to know: elements of standards, their structure, rules and features of application; methods of creation of the financial reporting on IFRS; to be able: to constitute the financial reporting of corporations according to the Russian rules and IFRS; to carry out the analysis of the financial reporting, to reveal problems and to determine prospects of application Russian and international accounting standards; to master: analyze the financial reporting, the formulation of conclusions on analysis results and developments of the main management decisions.

1. Theoretical part

The fundamental qualitative characteristics of the financial statements are relevance, materiality and faithful representation.

Re le va n ce

Relevant financial information is capable of making a difference in the decisions made by users. Information may be capable of making a difference in a decision even if some users choose not to take advantage of it or are already aware of it from other sources.

Mat eria li t y

Information is material if omitting it or misstating it could influence decisions that users make on the basis of financial information about a specific reporting entity. In other words, materiality is an entity-specific aspect of relevance based on the nature or magnitude, or both, of the items to which the information relates in the context of an individual entity’s financial report. Consequently, the Board cannot specify a uniform quantitative threshold for materiality or predetermine what could be material in a particular situation.

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Fai t h fu l rep r es e nta tio n

Financial reports represent economic phenomena in words and numbers. To be useful, financial information must not only represent relevant phenomena, but it must also faithfully represent the phenomena that it purports to represent. To be a perfectly faithful representation, a depiction would have three characteristics. It would be complete, neutral and free from error.

A complete depiction includes all information necessary for a user to understand the phenomenon being depicted, including all necessary descriptions and explanations.

A neutral depiction is without bias in the selection or presentation of financial information. A neutral depiction is not slanted, weighted, emphasised, deemphasised or otherwise manipulated to increase the probability that financial information will be received favourably or unfavourably by users. Neutral information does not mean information with no purpose or no influence on behaviour. On the contrary, relevant financial information is, by definition, capable of making a difference in users’ decisions.

Faithful representation does not mean accurate in all respects. Free from error means there are no errors or omissions in the description of the phenomenon, and the process used to produce the reported information has been selected and applied with no errors in the process. In this context, free from error does not mean perfectly accurate in all respects.

The enhancing qualitative characteristics of the financial statements are comparability, verifiability, timeliness and understandability.

Co mp ar ab i li t y

Users’ decisions involve choosing between alternatives, for example, selling or holding an investment, or investing in one reporting entity or another. Consequently, information about a reporting entity is more useful if it can be compared with similar information about other entities and with similar information about the same entity for another period or another date.

Veri fiab il it y

Verifiability helps assure users that information faithfully represents the economic phenomena it purports to represent. Verifiability means that different knowledgeable and independent observers could reach consensus, although not necessarily complete agreement, that a particular depiction is a faithful representation. Quantified information need not be a single point estimate to be verifiable. A range of possible amounts and the related probabilities can also be verified.

T i me li n es s

Timeliness means having information available to decision-makers in time to be capable of influencing their decisions. Generally, the older the information is the less useful it is. However, some information may continue to be timely

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long after the end of a reporting period because, for example, some users may need to identify and assess trends.

U nd er st a nd ab i li t y

Classifying, characterising and presenting information clearly and concisely makes it understandable.

Some phenomena are inherently complex and cannot be made easy to understand. Excluding information about those phenomena from financial reports might make the information in those financial reports easier to understand. However, those reports would be incomplete and therefore potentially misleading.

The concepts of capital give rise to the following concepts of capital maintenance:

a)Financial capital maintenance. Under this concept a profit is earned only if the financial (or money) amount of the net assets at the end of the period exceeds the financial (or money) amount of net assets at the beginning of the period, after excluding any distributions to, and contributions from, owners during the period. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power.

b)Physical capital maintenance. Under this concept a profit is earned only if the physical productive capacity (or operating capability) of the entity (or the resources or funds needed to achieve that capacity) at the end of the period exceeds the physical productive capacity at the beginning of the period, after excluding any distributions to, and contributions from, owners during the period.

2. Tasks

Task 1

1.If the company undertakes (according to the policy) to correct defects of the products even after the expiration of warranty period whether then future expenses on guarantee maintenance of already sold goods are these liabilities?

2.Purchase of goods (and use of services) leads to formation of an accounts payable to suppliers and contractors (except as specified when the purchased goods were paid in the advance payment or in payment of the executed delivery). Is it necessary to consider an accounts payable as the liability? Whether the liability on its settlement creates a bank loan?

3.The company placed the order for materials which will be just delivered. Is there a liability on payment?

Task 2

At what cost assets and liabilities in the below-stated examples are estimated?

1. The company has assets and liabilities in foreign currency. From the reporting date it carries out their revaluation for the purpose of reflection of the current exchange rate (reduction to market value).

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2.The company makes the decision to reflect some assets in the balance sheet. It learns the corresponding market prices and uses them for the purpose of reflection of the specified assets.

3.The company creates the allowance of the forthcoming expenses on preservation of the mine. Works won't be carried out within 20 years, and the cost amount is essential. It discounts the amount of future costs according to IFRS 37.

Task 3

What concept of the equity is reflected in the given examples?

1.The rate of inflation in the country is 10% a year. If investments into the company bring less than 10%, then purchasing power of investors falls. If she gains income exceeding 10%, then investors will subtract the loss of purchasing power from the created income.

2.The rate of inflation in the country is 10% a year. At the same time oil is the main raw materials of the company, and costs increased by 25%. If investments into the company bring less than 25%, then the productive capability of the company falls.

Task 4

The company owns the office building which part is leased. The office of the company is located in the same building.

What International accounting standard should be applied for this object?

3.Recommended literature: 1, 2, 3, 4, 5, 6, 7, 8, 14, 15.

3.INTERNATIONAL FINANCIAL REPORTING STANDARDS

AND DISCLOSURE OF INFORMATION

The purpose is studying of features of recognition of financial statement elements, and also standards on submission of the financial statement and disclosure of information.

Knowledge and skills: students have to know: content of the basic principles of the Russian and international standards of the financial reporting; methods of creation of the financial reporting under IFRS; to be able: to put into practice the main acceptances and methods of creation and the analysis of the financial reporting of large corporate bodies according to the Russian and international standards; to master: skills of carrying out the complex analysis of the financial reporting constituted in compliance with the Russian rules and IFRS.

1. Theoretical part

The principles of preparation and creation of the financial reporting were accepted by Board of IFRS in April, 1989, determine fundamental provisions

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