Question

QUESTION 4 Finbarr Moore maintains a combined Gas and Electricity account in his ledger and prepares accounts to 31 December each year. At 1 January 2019, the balances on the Gas and Electricity Account were as follows: • Electricity prepaid 3 months to 31 March 2019 €4,800 • Gas due 2 months to 31 December 2018 €6,000 Gas is payable quarterly in arrears; electricity is payable half yearly in advance. The following payments were made by cheque during 2019: Date Payment Details 4 February Paid gas for the quarter to 31 January 2019 10 May Paid electricity for the half year to 30 September 2019 12 May Paid gas for the quarter to 30 April 2019 6 August Paid gas for the quarter to 31 July 2019 3 October Paid electricity for the half year to 31 March 2020 1 November Paid gas for the quarter to 31 October 2019 Electricity was increased by €1,200 per year with effect from 1 April 2019. Gas was increased by €6,000 per year with effect from 1 October 2019. Requirement: Prepare the Gas and Electricity account for Finbarr Moore for 2019. (20 marks) The aim of the International Financial Reporting Standards (IFRS) Foundation is to develop and promote a single set of high quality financial reporting standards. The IFRS has three subsidiary bodies to assist in achieving this goal, that is: 1. The International Accounting Standards Board (ASB) 2. The International Financial Reporting Interpretations Committee (IFRIC) 3. The IFRS Advisory Council (AC) (b) Requirement: Briefly discuss the main tasks of each of these three bodies, i.e. The IASB, IFRIC and the AC. (10 marks) Total Question 4: (30 marks) Page 6 of 6

Answer 1

Answer to (b).

1). International Accounting Standards Board (IASB)

Objectives of International Accounting Standards:
The objectives of IASB which are set out in its revised agreement and constitution are:

(i) To formulate and publish in the public interest accounting standards to be observed in the presentation of financial statements and to promote their worldwide acceptance and observation; and

(ii) To work for the improvement and harmonisation of regulation accounting standards and procedures relating to the presentation of financial statements.

Under the IFRS Foundation Constitution, the objectives of the IASB are:

a). to develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated principles. These standards should require high quality, transparent and comparable information in financial statements and other financial reporting to help investors, other participants in the world’s capital markets and other users of financial information make economic decisions;

b). to promote the use and rigorous application of those standards; in fulfilling the objectives associated with (a) and (b), to take account of, as appropriate, the needs of a range of sizes and types of entities in diverse economic settings;

c).and to promote and facilitate adoption of IFRSs, being the standards and interpretations issued by the IASB, through the convergence of national accounting standards and IFRSs.

2). International Financial Reporting Interpretations Committee

According to the Due Process Handbook of the IFRIC, “IFRIC reviews newly identified financial reporting issues not specifically addressed in IFRSs or issues where unsatisfactory or conflicting interpretations have developed, or seem likely to develop in the absence of authoritative guidance, with a view to reaching a consensus on the appropriate treatment.” IFRIC is not charged with creating rules, application guidance or implementation guidance, nor does it act as an urgent issues group.

It is not IFRIC’s role to create new IFRS, but rather, to interpret existing IFRS. IFRIC provides interpretative guidance by applying a principles-based approach founded on the IFRS Conceptual Framework and as established in relevant IFRS. IFRIC cannot issue an interpretation that changes or conflicts with IFRS or the Framework. If, as a result of its deliberations, IFRIC concludes that the requirements of an IFRS differ from the Framework, or that a particular IFRS is deficient or inadequate in a specific area, or that the question IFRIC is addressing should be more fully addressed by the Board, IFRIC will refer the issue to the IASB for resolution. IFRIC may choose to provide guidance recommendation to the IASB, but it is not responsible for the development of new IFRS guidance.

3).The IFRC Advisory Council (AC) :

About the IFRS Advisory Council (Advisory Council)
The Advisory Council is the formal advisory body to the International Accounting Standards Board (Board) and the Trustees of the IFRS Foundation. It consists of a wide range of representatives, comprising individuals and organisations with an interest in international financial reporting.

The focus of the Advisory Council is to provide strategic support and advice to the IFRS Foundation, and it meets in London at least two times a year for a period of two days.