Question 1

With respect to the concept of sustainability which of these statements is not true?

Accepted Answer

All the statements provided are true in the context of sustainability. Sustainability encompasses eco-efficiency and eco-justice, requires consideration of economic, social, and environmental objectives, and has recently focused significantly on eco-efficiency.

Question 2

The most widely used set of guidelines for sustainability reporting are published by:

Accepted Answer

The Global Reporting Initiative (GRI) is the most widely used set of guidelines for sustainability reporting. It is an international independent standards organization that helps businesses and governments understand and communicate their impacts on sustainability issues such as climate change, human rights, and corruption. The GRI Standards are used by thousands of companies worldwide to disclose their sustainability performance, and they provide a framework for companies to report on their sustainability impacts in a consistent and comparable manner.

Question 3

A criticism of the XBRL system is:

Accepted Answer

XBRL (eXtensible Business Reporting Language) standardizes financial reporting, which could limit CFOs' discretion in choosing how detailed their financial disclosures are.

Question 4

The Sarbanes-Oxley Act in the United States decided not to restrict auditors' provision of non-audit consulting services to their clients as the evidence that the practice comprised auditor's independence was mixed.

Accepted Answer

The Sarbanes-Oxley Act actually did restrict auditors' provision of non-audit consulting services to their clients, recognizing the potential for such services to compromise auditor independence.

Question 5

International auditing standards are issued by the International Accounting Standards Board.

Accepted Answer

International auditing standards are issued by the International Auditing and Assurance Standards Board (IAASB), which operates under the auspices of the International Federation of Accountants (IFAC).

Question 6

In October 2008 the IASB changed the rules for financial assets so that,under certain circumstances,the assets could be reclassified to avoid charging mark-to-market losses to the income statement.

Accepted Answer

This statement is true. The IASB did make changes to the rules for financial assets in 2008 that allowed for reclassification under certain circumstances to avoid mark-to-market losses being charged to the income statement.

Question 7

SFAS 157 explicitly uses exit price as a definition of fair value but IFRS fair value is neither explicitly an exit nor an entry price.

Accepted Answer

SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, which is an exit price notion. IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, without specifying it as either an exit or entry price.

Question 8

The statement that is most correct regarding the application of fair value accounting and the global financial crisis (GFC)is:

Accepted Answer

Some experts and industry leaders have argued that the use of fair value accounting, particularly in the valuation of complex financial instruments, contributed to the spread of the GFC by exacerbating market volatility and amplifying losses. However, it is important to note that fair value accounting was not the sole cause of the crisis and other factors, such as lax lending standards and inadequate risk management practices, also played a role. Additionally, there were some changes made to international accounting standards in response to the GFC, including the introduction of new disclosure requirements for fair value measurements.

Question 9

It is agreed among accountants that a big contributor of the 2008 global financial crisis was the practice of requiring firms to mark their assets to fair value.

Accepted Answer

The statement is not entirely accurate or agreed upon by all accountants. While some argue that mark-to-market accounting exacerbated the crisis, others contend that it was a combination of factors such as lax lending standards, complex financial instruments, and regulatory failures.

Question 10

It is usually considered that IFRS standards are more principles-based and US standards are more rule-based.

Accepted Answer

This is a commonly held belief as IFRS standards are based on general principles and concepts whereas US standards are more detailed and prescriptive in nature. However, both sets of standards continue to evolve and may incorporate aspects of each other's approach in the future.

Question 11

In 2008 the IASB voted to require the 500 largest companies of each member to file their 2009 financial reports using Extensible Business Reporting Language (XBRL).

Accepted Answer

The IASB (International Accounting Standards Board) does not mandate the filing format for financial reports directly. The adoption of XBRL (Extensible Business Reporting Language) for financial reporting is typically decided by regulatory bodies in individual jurisdictions, not by the IASB itself.

Question 12

The statement concerning the XBRL system of reporting that is not true is:

Accepted Answer

The XBRL system of reporting was not developed by the IASB, but instead by a consortium of different organizations including accounting firms, software companies, and regulatory bodies.

Question 13

It is not true that:

Accepted Answer

The answer of It is not true that:
...

Question 14

Despite the existence of 'the Roadmap',it is not certain that the United States will adopt IFRS.

Accepted Answer

The Roadmap is a plan for the eventual adoption of IFRS, but it does not guarantee that the US will definitely adopt IFRS. The decision to adopt IFRS ultimately rests with the Securities and Exchange Commission (SEC).

Question 15

In a recent survey KPMG reported that what percentage of the reporting companies worldwide use the Global Reporting Initiative guidelines?

Accepted Answer

According to the most recent data available up to my last update in 2023, approximately 70% of the reporting companies worldwide use the Global Reporting Initiative (GRI) guidelines for sustainability reporting. This high adoption rate underscores the GRI's status as a leading framework for sustainability reporting globally.

Question 16

The statement that is not true in relation to the internationalisation of auditing standards is:

Accepted Answer

The statement that the IAASB has been praised for its independence from the auditing profession is not entirely true. While the IAASB is intended to be independent, there have been criticisms that it is not entirely free from influence from the auditing profession.

Question 17

The body that has been formed to oversee the International Auditing and Assurance Standards Board is:

Accepted Answer

The board formed to oversee the International Auditing and Assurance Standards Board is the Public Interest Oversight Board (PIOB). The PCAOB is a separate organization responsible for overseeing auditors of public companies in the US, the IASB is responsible for setting international accounting standards, and XBRL is a technology for financial reporting.

Question 18

The water standards currently under development in Australia will essentially require qualitative rather than quantitative reports.

Accepted Answer

The water standards being developed in Australia, like those in many countries, typically focus on quantitative measures to ensure water safety and quality, specifying limits for contaminants, physical, chemical, and microbiological parameters that can be quantitatively tested and reported.

Question 19

The statement that is correct concerning the convergence of IASB and US accounting standards is:

Accepted Answer

The SEC released a 'Roadmap' in 2008 outlining the steps that would need to be taken for the potential use of International Financial Reporting Standards (IFRS) by US companies by 2014. However, there is still no definitive agreement to adopt IFRS by the SEC by 2014 or any specific date.

Question 20

Social accounting and reporting aims at observing and assimilating issues not necessarily covered by traditional accounting functions into a form that can be used for decision making by individuals not necessarily directly or only concerned with the financial success of the entity.

Accepted Answer

Social accounting and reporting involves incorporating non-financial information into decision making for a wider range of stakeholders beyond just those focused on financial success.

Quiz 14: Emerging Issues in Accounting and Auditing