Question 1

In which year did it become mandatory for E.U.& Australian listed companies to comply with IFRS?&#10;A)2004&#10;B)2005&#10;C)2006&#10;D)2007

Accepted Answer

It became mandatory for E.U. listed companies to comply with IFRS from January 1, 2005, and for Australian listed companies from January 1, 2005, for companies reporting under S Corporations Law or from January 1, 2006, for other companies.

Question 2

The 7^th directive extended the 4^th Directive to include: A)Smaller companies B)Companies limited by guarantee C)the preparation of consolidated (group)accounts D)Unlimited partnerships

Accepted Answer

The 7^th Directive extended the 4^th Directive to include the preparation of consolidated (group) accounts, which means combining the financial statements of a parent company and its subsidiaries. This is applicable to all companies, including smaller companies and those limited by guarantee, but not necessarily to unlimited partnerships.

Question 3

'Harmonization' applies the imposition of a rigid and narrow set of rules.

Accepted Answer

Harmonization aims to create consistency and coherence among different policies or regulations, but it does not necessarily entail imposing a rigid and narrow set of rules. It can also involve a flexible framework that allows for variations or adaptations to local contexts.

Question 4

For any particular topic,it is not possible to have de jure harmonization without also having de facto harmonization.

Accepted Answer

De jure harmonization refers to the formal, legal standardization of laws, regulations, or practices across different jurisdictions, achieved through legislation or international agreements. De facto harmonization, on the other hand, occurs in practice, through the actual behavior of entities or individuals, without necessarily being codified into law. It is possible to have de jure harmonization without de facto harmonization if the laws are officially aligned but not effectively implemented or followed in practice.

Question 5

The period allowed for commentary on an exposure draft is;&#10;A)Never less than 120 days but may be longer for big issues&#10;B)Never more than 120 days but may be less in some circumstances&#10;C)Normally 120 days but may be more or less&#10;D)Always 120 days no more,no less

Accepted Answer

The period allowed for commentary on an exposure draft is normally 120 days but may be more or less depending on the specific circumstances of the issue being addressed. Therefore, option C is the correct option as it acknowledges that the period may vary. Option A is incorrect because it implies that the period could never be less than 120 days, which is not always the case. Option B is incorrect because it implies that the period could never be more than 120 days, which is also not always the case. Option D is incorrect because it implies that the period is always fixed at 120 days with no variation, which is not true.

Question 6

Some Member States (notably France & Belgium)prohibit companies from preparing individual accounts compliant with IAS / IFRS.Why is this so?&#10;A)There is a strong correlation between accounting profit and taxable profit in those countries&#10;B)They do not wish to burden enterprise with additional levels of bureaucracy&#10;C)They believe compliance should be voluntary&#10;D)They wish to wait until there is complete harmonization before complying with IFRS

Accepted Answer

In France and Belgium, there is a strong correlation between accounting profit and taxable profit. This means that the profit reported in the company's financial statements directly affects the amount of taxes the company must pay. Because IFRS allows for more flexibility and judgement in preparing financial statements, it is possible for companies to manipulate their financial statements in order to reduce their tax liability. Therefore, these countries prohibit companies from using IFRS to prepare their financial statements in order to ensure that the financial statements accurately reflect the company's taxable income.

Question 7

The role of the European Financial Reporting & Advisory Group (EFRAG)does NOT include:&#10;A)Providing proactive advice to the IASB&#10;B)Advising the European Commission on the acceptability of IFRSs for endorsement in Europe&#10;C)Advising the European Commission on the economic impact of particular IFRSs&#10;D)Advising the European Commission on any resulting changes to be made to the Accounting Directives and related topics

Accepted Answer

Advising the European Commission on the economic impact of particular IFRSs is not a role of EFRAG.

Question 8

An EU Directive is a binding agreement by all Member States that they will introduce the contained principles into national legislation.

Accepted Answer

EU Directives are binding agreements that require Member States to implement the principles contained in the Directive into their own national legislation. Failure to do so can result in legal action being taken by the European Commission.

Question 9

The International Accounting Standards Committee is the predecessor of the International Accounting Standards Board.

Accepted Answer

The International Accounting Standards Committee was established in 1973 and was replaced by the International Accounting Standards Board in 2001.

Question 10

When the IASB issues standards and interpretations they immediately become applicable within the EU.

Accepted Answer

Before standards and interpretations issued by the International Accounting Standards Board (IASB) become applicable within the European Union (EU), they must undergo an endorsement process. This process involves a review to ensure that the standards are conducive to the European public good and meet specific criteria before they are adopted and become legally enforceable in the EU.

Deck 3: The Process of Harmonization