Question Tag: Financial Disclosure

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PSAF – Nov 2024 – L2 – Q2b – Related Party Transactions and Disclosures

Explains related party transactions and their implications under IPSAS 20.

Question

You are the Director of Finance at the Ghana Water Development Authority, an entity under the Ministry of Forestry and Water. The Authority has a five-member Board chaired by the daughter of the Sector Minister. The Chief Executive Officer of the Authority has just been appointed by Government for an initial term of four years.

The Chairperson of the board runs boutique services. The Authority buys a lot of presents from this boutique whenever they are confronted with the need to give out presents to any high-profile person. The Chairperson has made a request to the Authority to finance her boutique services with an amount of GH¢546,000 to enable her business to pay some urgent bills. No terms or conditions were provided in the request. Such an assistance from a financial institution would attract the current prevailing bank interest on loans at a rate of 35% per annum. Recently, another member of the Board contracted a loan from the Bank for her child’s university entrance fees at that rate.

Management of the Authority indicated that the amount was not significant to the Authority and has been approved by the Head of the entity and the Chief Director. The approved document has been handed over to you for payment. Considering the PFM Laws and IPSAS, you engaged the Chief Director about the request, but you were directed to go ahead and pay and use the appropriate accounting treatment in such circumstances. You accordingly raised the necessary documentation and effected the payment.

Required:

In relation to IPSAS 20: Related Party Disclosures:

i) Explain the implications of this transaction on the Authority and state how you would account for this transaction in the financial statements of the entity.

ii) State SIX situations where related party transactions may lead to disclosures by a reporting entity.

iii) Explain TWO reasons for disclosing related party transactions/relations.

Answer

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Tags: Conflict of Interest, Financial Disclosure, Governance, IPSAS 20, Related Party Transactions, Transparency
Level: Level 2

Topic: International public sector accounting standards
Series: Nov 2024

CR – May 2021 – L3 – Q2b – Segment Reporting (IFRS 8)

Apply IFRS 8 principles to segment information and discuss disclosure requirements.

Question

The advisors of Amaka Limited have requested various types of information from the company to facilitate the preparation of a prospectus and other financial information in view of the fact that Amaka Limited is about to be listed on the Nigerian Stock Exchange.

As the Chief Accountant of the company, the CEO has requested that you provide the advisors with necessary information about your company that you use to allocate resources and assess performance of the company in year 2019.

You have therefore identified the following potential segments that could be reported on, based on the areas of location of the company’s operations in West Africa.

Location	Revenue (N’000)	Profit/(Loss) (N’000)	Assets (N’000)	Liabilities (N’000)
Gambia	93,600	19,440	98,460	75,600
Ghana	25,200	(7,740)	14,400	13,500
Nigeria	317,340	21,240	258,210	74,970
Togo	41,400	(1,440)	21,600	14,400
Total	477,540	31,500	392,670	178,470

Required:

i. Explain how the principles highlighted in (a) above would be applied to Amaka Limited using the information provided. (12 Marks)
ii. Discuss other disclosure requirements which Amaka Limited should include in the financial statements for the year ended December 31, 2019 as required by IFRS 8. (4 Marks)

Answer

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Tags: Financial Disclosure, IFRS 8, Operating segments, Segment Reporting
Level: Level 3

Topic: Segment Reporting (IFRS 8)

CR – May 2021 – L3 – Q2a – Segment Reporting (IFRS 8)

IFRS 8 on Operating Segments establishes principles for reporting information by operating segments. Discuss the principles in IFRS 8 for determining a company’s reportable operating segments.

Question

IFRS 8 on Operating Segments establishes principles for reporting information by operating segments. Discuss the principles in IFRS 8 for determining a company’s reportable operating segments.

Answer

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Tags: Financial Disclosure, IFRS 8, Operating segments, Reporting Standards
Level: Level 3

Topic: Segment Reporting (IFRS 8)

CR – May 2024 – L3 – SC – Q5a – Interim Financial Reporting (IAS 34)

Discuss the IAS 34 recommendations on interim reporting conditions and required disclosures.

Question

IAS 34 – Interim Financial Reporting does not make preparation of interim financial report mandatory, viewing it as a matter for government, security regulators, stock exchanges, or professional accountancy bodies within each country. However, the IASB strongly recommends that interim financial reporting be a requirement for companies whose equity or debt securities are publicly traded.

Required:

(i) Discuss the conditions under which IAS 34 encourages publicly traded entities to publish their interim reports. (3 Marks)

(ii) Identify and explain the notes that should be included in the interim report of traded entities in accordance with IAS 34. (5 Marks)

Answer

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Tags: : Interim Reporting, Financial Disclosure, IAS 34 Compliance, Interim Reports, Publicly Traded Entities, Regulatory Reporting
Level: Level 3

Topic: Interim Financial Reporting (IAS 34)
Series: MAY 2024

AAA – Nov 2017 – L3 – Q5 – Audit Evidence

Evaluate XYZ Bank’s provision for litigation, discuss audit procedures per ISA 501, and prepare litigation disclosure for financial statements.

Question

You are the audit manager for XYZ Bank Limited for the year ended December 31, 2016. The Bank’s Board noted a litigation issue involving a lawsuit from BBB Limited, where the Bank was found liable for a cheque conversion worth ₦2.1 billion. The high court imposed a penalty on the Bank for this amount, which BBB Limited is now claiming.

The Bank has objected to the judgment, appealing to the Court of Appeal, with legal counsel advising that a favorable outcome is expected. The Bank’s litigation-related financial information is as follows:

Provision for litigation (recognized in financial statements): ₦96 million
Litigation cases as defendant: 50
Litigation cases as plaintiff: 10
Claims in favor of the Bank: ₦2.7 billion
Claims against the Bank (including the ₦2.1 billion case): ₦3.2 billion

Requirements:
a. Discuss FOUR specific considerations under ISA 501 for obtaining audit evidence on litigation provisions.

(5 Marks)
b. Evaluate the adequacy of the litigation provision recognized in the financial statements as at December 31, 2016.

(5 Marks)
c. Prepare a summary disclosure of the litigation status for inclusion in the financial statement notes as at December 31, 2016.

(5 Marks)

Answer

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Tags: Audit evidence, Financial Disclosure, IAS 37, Litigation, Provisions
Level: Level 3

Topic: Audit evidence
Series: NOV 2017

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

Question

(b) The following events took place in Chakachaka Company Nig. Limited:

(i) Shortly after the financial year ended on June 30, 2018, but before the financial statements were authorized for issue, Chakachaka Nigeria Limited’s inventory was destroyed by a fire outbreak which resulted in a loss of N200 million.

(ii) The company’s financial year that ended June 30, 2018, shows an amount of N60 million due from one of its debtors, Mr. Onigbese. Chakachaka Nigeria Limited provided for impairment at June 30, 2018, of N15 million against the gross value of N60 million. On July 31, 2018, before the financial statements were authorized for issue, Mr. Onigbese was declared bankrupt and unable to pay the debt.

(iii) Chakachaka Nigeria Limited was sued on June 30, 2018, but the judgment was only handed down on July 21, 2018. The Company was found liable for damages and costs amounting to N31 million. On July 22, 2018, Chakachaka Nigeria Limited filed a claim with its insurers, and on July 29, 2018, it was notified that the insurer would only cover N26 million of the loss.

Required:
Prepare a brief memorandum advising the directors of Chakachaka Nigeria Limited on the accounting treatment and/or disclosure required as a result of the events in (i) to (iii) after the reporting date.

Answer

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Tags: Adjusting Events, Financial Disclosure, IAS 10, Non-adjusting Events
Level: Level 2

Topic: Events After the Reporting Period (IAS 10)
Series: NOV 2020

PSAF – Nov 2024 – L2 – Q2b – Related Party Transactions and Disclosures

Explains related party transactions and their implications under IPSAS 20.

Question

Required:

In relation to IPSAS 20: Related Party Disclosures:

i) Explain the implications of this transaction on the Authority and state how you would account for this transaction in the financial statements of the entity.

ii) State SIX situations where related party transactions may lead to disclosures by a reporting entity.

iii) Explain TWO reasons for disclosing related party transactions/relations.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Conflict of Interest, Financial Disclosure, Governance, IPSAS 20, Related Party Transactions, Transparency
Level: Level 2

Topic: International public sector accounting standards
Series: Nov 2024

CR – May 2021 – L3 – Q2b – Segment Reporting (IFRS 8)

Apply IFRS 8 principles to segment information and discuss disclosure requirements.

Question

You have therefore identified the following potential segments that could be reported on, based on the areas of location of the company’s operations in West Africa.

Location	Revenue (N’000)	Profit/(Loss) (N’000)	Assets (N’000)	Liabilities (N’000)
Gambia	93,600	19,440	98,460	75,600
Ghana	25,200	(7,740)	14,400	13,500
Nigeria	317,340	21,240	258,210	74,970
Togo	41,400	(1,440)	21,600	14,400
Total	477,540	31,500	392,670	178,470

Required:

Answer

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Tags: Financial Disclosure, IFRS 8, Operating segments, Segment Reporting
Level: Level 3

Topic: Segment Reporting (IFRS 8)

CR – May 2021 – L3 – Q2a – Segment Reporting (IFRS 8)

IFRS 8 on Operating Segments establishes principles for reporting information by operating segments. Discuss the principles in IFRS 8 for determining a company’s reportable operating segments.

Question

Answer

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Tags: Financial Disclosure, IFRS 8, Operating segments, Reporting Standards
Level: Level 3

Topic: Segment Reporting (IFRS 8)

CR – May 2024 – L3 – SC – Q5a – Interim Financial Reporting (IAS 34)

Discuss the IAS 34 recommendations on interim reporting conditions and required disclosures.

Question

Required:

(i) Discuss the conditions under which IAS 34 encourages publicly traded entities to publish their interim reports. (3 Marks)

(ii) Identify and explain the notes that should be included in the interim report of traded entities in accordance with IAS 34. (5 Marks)

Answer

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Tags: : Interim Reporting, Financial Disclosure, IAS 34 Compliance, Interim Reports, Publicly Traded Entities, Regulatory Reporting
Level: Level 3

Topic: Interim Financial Reporting (IAS 34)
Series: MAY 2024

AAA – Nov 2017 – L3 – Q5 – Audit Evidence

Evaluate XYZ Bank’s provision for litigation, discuss audit procedures per ISA 501, and prepare litigation disclosure for financial statements.

Question

Provision for litigation (recognized in financial statements): ₦96 million
Litigation cases as defendant: 50
Litigation cases as plaintiff: 10
Claims in favor of the Bank: ₦2.7 billion
Claims against the Bank (including the ₦2.1 billion case): ₦3.2 billion

Requirements:
a. Discuss FOUR specific considerations under ISA 501 for obtaining audit evidence on litigation provisions.

(5 Marks)
b. Evaluate the adequacy of the litigation provision recognized in the financial statements as at December 31, 2016.

(5 Marks)
c. Prepare a summary disclosure of the litigation status for inclusion in the financial statement notes as at December 31, 2016.

(5 Marks)

Answer

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Tags: Audit evidence, Financial Disclosure, IAS 37, Litigation, Provisions
Level: Level 3

Topic: Audit evidence
Series: NOV 2017

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

Question

(b) The following events took place in Chakachaka Company Nig. Limited:

Answer

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Tags: Adjusting Events, Financial Disclosure, IAS 10, Non-adjusting Events
Level: Level 2

Topic: Events After the Reporting Period (IAS 10)
Series: NOV 2020

Question Tag: Financial Disclosure

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PSAF – Nov 2024 – L2 – Q2b – Related Party Transactions and Disclosures

Explains related party transactions and their implications under IPSAS 20.

CR – May 2021 – L3 – Q2b – Segment Reporting (IFRS 8)

Apply IFRS 8 principles to segment information and discuss disclosure requirements.

Required:

CR – May 2021 – L3 – Q2a – Segment Reporting (IFRS 8)

IFRS 8 on Operating Segments establishes principles for reporting information by operating segments. Discuss the principles in IFRS 8 for determining a company’s reportable operating segments.

CR – May 2024 – L3 – SC – Q5a – Interim Financial Reporting (IAS 34)

Discuss the IAS 34 recommendations on interim reporting conditions and required disclosures.

AAA – Nov 2017 – L3 – Q5 – Audit Evidence

Evaluate XYZ Bank’s provision for litigation, discuss audit procedures per ISA 501, and prepare litigation disclosure for financial statements.

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

PSAF – Nov 2024 – L2 – Q2b – Related Party Transactions and Disclosures

Explains related party transactions and their implications under IPSAS 20.

CR – May 2021 – L3 – Q2b – Segment Reporting (IFRS 8)

Apply IFRS 8 principles to segment information and discuss disclosure requirements.

Required:

CR – May 2021 – L3 – Q2a – Segment Reporting (IFRS 8)

IFRS 8 on Operating Segments establishes principles for reporting information by operating segments. Discuss the principles in IFRS 8 for determining a company’s reportable operating segments.

CR – May 2024 – L3 – SC – Q5a – Interim Financial Reporting (IAS 34)

Discuss the IAS 34 recommendations on interim reporting conditions and required disclosures.

AAA – Nov 2017 – L3 – Q5 – Audit Evidence

Evaluate XYZ Bank’s provision for litigation, discuss audit procedures per ISA 501, and prepare litigation disclosure for financial statements.

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

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PSAF – Nov 2024 – L2 – Q2b – Related Party Transactions and Disclosures

Explains related party transactions and their implications under IPSAS 20.

You're reporting an error for "PSAF – Nov 2024 – L2 – Q2b – Related Party Transactions and Disclosures"

CR – May 2021 – L3 – Q2b – Segment Reporting (IFRS 8)

Apply IFRS 8 principles to segment information and discuss disclosure requirements.

Required:

You're reporting an error for "CR – May 2021 – L3 – Q2b – Segment Reporting (IFRS 8)"

CR – May 2021 – L3 – Q2a – Segment Reporting (IFRS 8)

IFRS 8 on Operating Segments establishes principles for reporting information by operating segments. Discuss the principles in IFRS 8 for determining a company’s reportable operating segments.

You're reporting an error for "CR – May 2021 – L3 – Q2a – Segment Reporting (IFRS 8)"

CR – May 2024 – L3 – SC – Q5a – Interim Financial Reporting (IAS 34)

Discuss the IAS 34 recommendations on interim reporting conditions and required disclosures.

You're reporting an error for "CR – May 2024 – L3 – SC – Q5a – Interim Financial Reporting (IAS 34)"

AAA – Nov 2017 – L3 – Q5 – Audit Evidence

Evaluate XYZ Bank’s provision for litigation, discuss audit procedures per ISA 501, and prepare litigation disclosure for financial statements.

You're reporting an error for "AAA – Nov 2017 – L3 – Q5 – Audit Evidence"

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

You're reporting an error for "FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)"

PSAF – Nov 2024 – L2 – Q2b – Related Party Transactions and Disclosures

Explains related party transactions and their implications under IPSAS 20.

You're reporting an error for "PSAF – Nov 2024 – L2 – Q2b – Related Party Transactions and Disclosures"

CR – May 2021 – L3 – Q2b – Segment Reporting (IFRS 8)

Apply IFRS 8 principles to segment information and discuss disclosure requirements.

Required:

You're reporting an error for "CR – May 2021 – L3 – Q2b – Segment Reporting (IFRS 8)"

CR – May 2021 – L3 – Q2a – Segment Reporting (IFRS 8)

IFRS 8 on Operating Segments establishes principles for reporting information by operating segments. Discuss the principles in IFRS 8 for determining a company’s reportable operating segments.

You're reporting an error for "CR – May 2021 – L3 – Q2a – Segment Reporting (IFRS 8)"

CR – May 2024 – L3 – SC – Q5a – Interim Financial Reporting (IAS 34)

Discuss the IAS 34 recommendations on interim reporting conditions and required disclosures.

You're reporting an error for "CR – May 2024 – L3 – SC – Q5a – Interim Financial Reporting (IAS 34)"

AAA – Nov 2017 – L3 – Q5 – Audit Evidence

Evaluate XYZ Bank’s provision for litigation, discuss audit procedures per ISA 501, and prepare litigation disclosure for financial statements.

You're reporting an error for "AAA – Nov 2017 – L3 – Q5 – Audit Evidence"

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

You're reporting an error for "FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)"

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