WEEK 3

Distinguishing between principle, policies and standards: Accounting principles are a set of rules that governs current accounting practice and that is used as a reference to determine the appropriate treatment of complex transactions. They are the rules that govern good practice. Accounting standards - principles that govern current accounting practice and that are used as a reference to determine the appropriate treatment of complex transactions. They are a set of rules stating how particular types of transactions and other events should be reflected in financial statements. Accounting Policies are specific policies and procedures used by a company to prepare its financial statements. These include any methods, measurement systems and procedures for presenting disclosures. Accounting policies differ from accounting principles in that the principles are the rules and the policies are a company's way of adhering to the rules. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) International Financial Reporting Standards (IFRS) are a set of accounting standards (principles-based standards, interpretations and the framework) developed by the International Accounting Standards Board (IASB) that are becoming the global standard for the preparation of public company financial statements. They establish broad rules as well as dictating specific treatments. Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and SICs. The IASB has continued to develop standards calling the new standards IFRS. The term International Financial Reporting Standards (IFRSs) has both a narrow and a broad meaning. Narrowly, IFRSs refers to the new numbered series of pronouncements that the IASB is issuing, as distinct from the International Accounting Standards (IASs) series issued by its predecessor. More broadly, IFRSs refers to the entire body of IASB pronouncements, including standards and interpretations approved by the IASB and IASs and SIC interpretations approved by the predecessor International Accounting Standards Committee. STRUCTURE OF IFRS The transformation of IASC to IASB started in September 1996 when IASC Board approved the formation of a 'Strategy Working Party' (SWP) to consider what IASC's strategy and structure should be when it completes the 'Core Standards' work programme. International Accounting Standards (IAS), 1973 to 2001 IAS were issued by the Board of the International Accounting Standards Committee (IASC) International Financial Reporting Standards (IFRS), 01/04/2001 to date IFRS are issued by the International Accounting Standards Board (IASB)

Interpretations by Standing Interpretations Committee (SIC)

Interpretations by the International Interpretations Committee (IFRIC)

Financial

Reporting

The International Accounting Standards Committee (IASC) was formed in 1973 through an agreement made by professional accountancy bodies from Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland, and the United States of America. Additional sponsoring members were added in subsequent years, and in 1982 the sponsoring "members" of the IASC comprised all of the professional accountancy bodies that were members of the International Federation of Accountants (IFAC).

The IASB is organized under an independent Foundation named the IFRS Foundation. That Foundation is a not-for-profit corporation created under the laws of the State of Delaware, United States of America, on 8 March 2001

IASC Board described above. Consultative Group an advisory body representing a wide range of international organizations with an interest in accounting.

International Accounting Standards Board (IASB) has sole responsibility for establishing International Financial Reporting Standards (IFRSs).

Standing Interpretations Committee (SIC) developed and invited public comment on interpretations of IASC Standards, subject to final approval by the IASC Board. Advisory Council oversight body (despite its name, the Advisory Council functioned more like the Board of Trustees of the new IASC Foundation, described below). Steering Committees expert task forces for individual agenda projects.

IFRS Foundation (22 trustees) oversees the work of the IASB, the structure, and strategy, and has fundraising responsibility. Monitoring Board (16 members, part-time, max 3) oversees the IFRS Foundation Trustees, participates in the Trustee nomination process, and approves appointments to the Trustees. IFRS Interpretations Committee (14 members) develops interpretations for approval by the IASB. IFRS Advisory Council (approx 40) advises the IASB and the IASCF. Working Groups expert task forces for individual agenda projects.

INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB) The IASB is an independent accounting standard-setting body consisting of 15 members from nine countries. The IASB began operations in 2001 when it succeeded the International Accounting Standards Committee. It is funded by contributions from major accounting firms, private financial institutions and industrial companies, central and development banks, national funding regimes, and other international and professional organizations throughout the world. The principal responsibilities of the IASB are to: Develop and issue International Financial Reporting Standards and Exposure Drafts, and Approve Interpretations developed by the IFRS Interpretations Committee. The IASB has full discretion over developing and pursuing its technical agenda. The trustees' annual review of the strategy of the IFRS Foundation and the IASB and its effectiveness includes "consideration, but not determination, of the IASB's agenda Effective 1 February 2009, the publication of a Standard, Exposure Draft, or final IFRIC Interpretation requires approval by 10 of the Board's 16 members (9 if fewer than 16 members are sitting). All other decisions of the IASB require a simple majority vote. The Board meets monthly (except August) for approximately one week. Board meetings are normally held at the IASB's office in London. Since 2010, the IASB and FASB also meet jointly on a monthly basis. IFRS INTERPRETATIONS COMMITTEE (At their meeting in January 2010, the IASCF Trustees voted to rename the International Financial Reporting Interpretations Committee (IFRIC) to the IFRS Interpretations Committee) The IFRS Interpretations Committee develops interpretations of IASs and IFRSs. The Interpretations Committee replaced the former Standing Interpretations Committee (SIC) in March 2002. The Interpretations Committee's mission (from the IASCF Constitution) is: "to interpret the application of International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs) and provide timely guidance on financial reporting issues not specifically addressed in IASs and IFRSs, in the context of the IASB Framework, and undertake other tasks at the request of the IASB".

Publish Draft Interpretations for public comment and consider comments made within a reasonable period before finalizing an Interpretation.

Report to the Board and obtain Board approval for final Interpretations. Diagram of the Current IASB Structure

KEY IFRS PARTNERS Certain groups have been closely involved with the development of IASC Standards during the 1990s as participating observers at every IASC Board meeting and nearly all IASC steering committee meetings. Those groups continue to be closely involved with the work of the IASB. They are: 1. 2. 3. 4. 5. 6. 7. European Commission European Financial Reporting Advisory Group (EFRAG) International Organization of Securities Commissions (IOSCO) International Federation of Accountants (IFAC) US Financial Accounting Standards Board (FASB) United States Public Company Accounting Oversight Board (PCAOB) United States Securities and Exchange Commission (SEC)

MEMBERSHIP AND FUNCTIONS OF THE IASB STRUCTURES Body / Structure International Accounting Standards Board (IASB) Function Has sole responsibility for establishing International Financial Reporting Standards (IFRSs). Duties include: Develop and issue International Financial Reporting Standards and Exposure Drafts Approve Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) Oversees the work of the IASB, the structure, and strategy, and has fundraising responsibility. Membership 16 members, of whom at least 13 serve full-time and not more than 3 part-time. The board is required to have an appropriate mix of recent practical experience among auditors, preparers, users and academics. The Board will normally form Working Groups or other types of specialist advisory groups to give advice on major projects.

IFRS Foundation (22 trustees)

Monitoring Board (16 members, part-time, max 3)

Oversees the IFRS Foundation Trustees, participates in the Trustee nomination process, and approves appointments to the Trustees.

IFRS Interpretations Committee a.k.a. Financial Reporting Interpretations Committee) (14 members)

Develops interpretations for approval by the IASB.

Geographical balance of trustees. 6 from North America. 6 from Europe. 6 from the Asia/Oceania region 4 from any area, subject to establishing overall geographical balance. Comprises of the relevant leaders of the European Commission, the Japanese Financial Services Agency, the US SEC, the Emerging Markets Committee of IOSCO, and the Technical Committee of IOSCO. The chairman of the Basel Committee on Banking Supervision is a non-voting observer. The constitution requires an appropriate balance of professional backgrounds, including auditors, preparers, users, academics, and other officials serving the public interest. Two will normally be senior partners of prominent international accounting firms. 14 members* appointed by the Trustees for terms of three years (enlarged from 12 in Nov 2007)

IFRS Advisory Council (approx 40)

Working Groups

Advises the IASB and the IASCF. The IFRS Advisory Council provides a forum for participation by organisations and individuals, with an interest in international financial reporting, having diverse geographical and functional backgrounds Expert task forces for individual agenda projects.

Under the IFRS Foundation Constitution, the Advisory Council has 30 or more members. The number is currently around 40. The Trustees appoint members for a renewable term of three years. They have diverse geographic and functional backgrounds The IASCF Trustees' Procedures Committee reviews the proposed composition of each group to ensure that there is a satisfactory balance of perspectives. The groups include: Capital Markets Advisory Committee (formerly Analyst Representative Group) Global Preparers Forum (GPF) Financial Crisis Advisory Group (jointly with FASB) Emerging Economies Group (EEG) IFRS Advisory Council

Please Note! (a) International Federation of Accountants (IFAC) is the global organization for the accountancy profession. It works with its 164 members and associates (primarily national professional accountancy bodies) in 125 countries and jurisdictions to protect the public interest by encouraging high quality practices by the world's accountants. IFAC members and associates represent 2.5 million accountants employed in public practice, industry and commerce, government, and academia. IFAC structure and governance provide for the representation of its diverse constituencies and interaction with external groups that rely on or influence the work of professional accountants. Through its independent standard-setting boards, IFAC develops international standards on ethics, auditing and assurance, education, and public sector accounting standards. It also issues guidance to support professional accountants in business, small and medium practices, and developing nations. In addition, IFAC issues policy positions on topics of public interest and comment letters on matters relevant to the profession.

(b) International Public Sector Accounting Standards (IPSASs) these are accounting reporting guidelines developed specifically to offer reporting guidance to general-purpose financial reporting officers in the public sector. IPSASs are developed and issued by the International Public Sector Accounting Standards Board (IPSASB), a specialty board of the International Federations of Accountants (IFAC). IPSASB therefore, is an independent standard-setting board with special consideration to public sector financial reporting standards on ethics and public sector accounting. As a board of IFAC, IPSASB also issues guidance to support professional accountants working for the public sector organizations. In addition, IPSASB issues policy positions on topics of public interest. IPSAS are designed to apply to the general purpose financial statements of all public sector entities. Public sector entities include national (central), regional and local governments, and their component entities such as departments, agencies, boards, commissions, etc. It is important to note that IPSAS do not apply to Government Business Enterprises (GBE). IPSAS are developed and set out to recognize, measure, present and disclose requirements dealing with transactions and events in general purpose financial statements.

There are two sets of IPSAS; one set that apply to accrual basis of accounting and another set that apply to the cash basis accounting however, there is a move towards adoption of IPSAS hinging on accrual basis of accounting. IASB'S OBJECTIVES (a) To develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information in financial statements and other financial reporting to help participants in the world's capital markets and other users make economic decisions; (b) To promote the use and rigorous application of those standards; and (c) In fulfilling the objectives associated with (a) and (b), to take account of, as appropriate, the special needs of small and medium-sized entities and emerging economies; and (d) To bring about convergence of national accounting standards and International Accounting Standards and International Financial Reporting Standards to high quality solutions. SCOPE OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

IASB Standards are known as International Financial Reporting Standards (IFRSs). All International Accounting Standards (IASs) and Interpretations issued by the former IASC and SIC continue to be applicable unless and until they are amended or withdrawn. IFRSs apply to the general purpose financial statements and other financial reporting by profit-oriented entities those engaged in commercial, industrial, financial, and similar activities, regardless of their legal form. Entities other than profit-oriented business entities may also find IFRSs appropriate. General-purpose financial statements are intended to meet the common needs of shareholders, creditors, employees, and the public at large for information about an entity's financial position, performance, and cash flows. Other financial reporting includes information provided outside financial statements that assists in the interpretation of a complete set of financial statements or improves users' ability to make efficient economic decisions. IFRS apply to individual company and consolidated financial statements. A complete set of financial statements includes a statement of financial position, a statement of comprehensive income, a statement of cash flows, a statement of changes in equity, a summary of accounting policies, and explanatory notes. When a separate income statement is presented in accordance with IAS 1(2007), it is part of that complete set. In developing Standards, IASB intends not to permit choices in accounting treatment. Further, IASB intends to reconsider the choices in existing IASs with a view to reducing the number of those choices. IFRS will present fundamental principles in bold face type and other guidance in non-bold type (the 'black-letter'/'grey-letter' distinction). Paragraphs of both types have equal authority. The provision of IAS 1 that conformity with IAS requires compliance with every applicable IAS and Interpretation requires compliance with all IFRSs as well.

COMPLIANCE WITH IFRS Financial statements may not be described as complying with IFRSs unless they comply with all of the requirements of each applicable standard and each applicable interpretation. GLOBAL ACCEPTANCE OF IFRS: CONVERGENCE, ADOPTION OR ENDORSEMENT?

Adoption means that the local accounting standards body has set a specific timetable when publicly listed companies would be required to use IFRS as issued by the IASB. ICPAK has already decided on the adoption option.

Convergence means that local accounting standard setting bodies and the IASB would continue working together to develop high quality, compatible accounting standards over time. More convergence will make adoption easier and less costly and may even make adoption of IFRS unnecessary. Condorsement - under this approach (US mainly) the local account setters would continue to exist. These setters and IASB would work to finish joint converge projects and after completing those joint projects, convergence will follow over a period of time for standards that are not on the IASBs work plan. The proponents of this approach argue that that only a handful of the largest jurisdictions use IFRS as issued by the IASB with no mechanism for making changes to the standards Supporters of adoption, however, believe that convergence alone will never eliminate all of the differences between the two sets of standards. Approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies, although approximately 90 countries have fully conformed with IFRS as promulgated by the IASB and include a statement acknowledging such conformity in audit reports. County United States European Union Japan China Canada India Australia Brazil Argentina Indonesia Russia Saudi Arabia Mexico Republic of Korea South Africa Turkey Status Allowed for foreign issuers in the US since 2007; target date for substantial convergence with IFRSs is 2011 and decision about possible adoption for US companies expected in 2011. In March 2002, the European Parliament passed a resolution requiring all firms listed on stock exchanges of European member states to apply IFRS when preparing their financial statements for fiscal years beginning on or after January 1, 2005 Japan has introduced a roadmap for adoption that it will finally be decided on in 2012 (with a proposed adoption date of 2015 or 2016) but is permitting certain qualifying domestic companies to apply IFRS from fiscal years ending on or after March 31, 2010. Substantially converged national standards Required from 1 January 2011 for all listed entities and permitted for private sector entities including not-for-profit organizations Converging with IFRSs, date to be determined Required for all private sector reporting entities and as the basis for public sector reporting since 2005 Required for consolidated financial statements of banks and listed companies from 31 December 2010 and for individual company accounts progressively since January 2008 Required for fiscal years beginning on or after 1 January 2012 Convergence process ongoing; a decision about a target date for full compliance with IFRSs is expected to be made in 2012 Required for banking institutions and some other securities issuers; permitted for other companies Not permitted for listed companies Mexico will require IFRS for all listed companies starting in 2012. Required from 2011 All companies listed on the Johannesburg Stock Exchange have been required to comply with the requirements of International Financial Reporting Standards since 1 January 2005 Required for listed entities since 2005

FASB/IASB Memorandum of Understanding After their joint meeting in September 2002, the U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued the Norwalk Agreement, in which they each acknowledged their commitment to the development of high quality, compatible accounting standards that could be used for both domestic and cross-border financial reporting. At that meeting, the FASB and the IASB pledged to use their best efforts (a) to make their existing financial reporting standards fully compatible as soon as is practicable and (b) to co-ordinate their future work programs to ensure that once achieved, compatibility is maintained. In February 2006, the FASB and IASB issued a Memorandum of Understanding (MoU). The MoU set forth the relative priorities within the FASB-IASB joint work programs in the form of specific milestones to be reached by 2008. From the IASB's perspective, MoU projects that will be completed by 2011 include:

Consolidations

Derecognition Fair Value Measurements Financial Statement Presentation Income taxes Joint Ventures Leases Liabilities and Equity Distinction Post-employment Benefits, Including Pensions Revenue Recognition

Securities Exchange Commission US Adoption The SEC (US) has made it clear that it envisions 2015 as the earliest possible date for the required use of IFRS by US public companies. However, the SEC has indicated that while it is not pursuing an early adoption option, it could reconsider this position later. Still other countries have plans to either adopt or converge their national standards with IFRS. Kenya Compliance Status Kenya had adopted International Accounting Standards (IASs), later renamed International Financial Reporting Standards (IFRSs) in 1998, thereby "closing the gap" between national and international accounting standards. Reporting entities are required to comply with all IFRSs in force is required for all reporting entities (including unlisted companies); audit must state report states compliance with IFRS As of 2006, all IFRSs in effect were adopted (as drafted without any modifications except to rename the IFRS as a national standard and / or to translate it into another language"), states the 2006 ICPAK self-assessment. However, a 2006 survey by United Nations Conference on Trade and Development (UNCTAD) pointed out that in practice the levels of non-compliance with IFRSs in Kenya is quite high. In addition, UNCTAD reported that some industry specific regulation in Kenya and IFRS-based requirements are not compatible and thus universal adherence to IFRSs has not been achieved. In response, the ICPAK stated in a 2008 Action Plan prepared for the IFAC that it is in the process of reviewing the financial reporting environment to identify existing and potential hindrances to the adoption and implementation of IFRSs. The Accountants Act Cap 531 does not specifically require the application of IFRS. Nor does the Central Bank of Kenya Act (regulator of financial institution) Banking Act (under which financial are registered), or the Insurance Act Cap 487 (under which insurance companies are registered). ADVANTAGES OF USING IFRS By adopting IFRS, a business can present its financial statements on the same basis as its foreign competitors, making comparisons easier. Furthermore, companies with subsidiaries in countries that require or permit IFRS may be able to use one accounting language companywide. Companies also may need to convert to IFRS if they are a subsidiary of a foreign company that must use IFRS, or if they have a foreign investor that must use IFRS. Companies may also benefit by using IFRS if they wish to raise capital abroad. DISADVANTAGES OF USING IFRS

Despite a belief by some of the inevitability of the global acceptance of IFRS, others believe that U.S. GAAP is the gold standard, and that a certain level of quality will be lost with full acceptance of IFRS. Further, certain U.S. issuers without significant customers or operations outside the United States may resist IFRS because they may not have a market incentive to prepare IFRS financial statements. They may believe that the significant costs associated with adopting IFRS outweigh the benefits. Complex areas - There is a possibility that despite calls from world leaders to establish a single set of global standards, we could end up with two different sets of rules in the area of financial instrument recognition and measurement. CONSEQUENCES OF CONVERSION Conversion to IFRS is much more than an accounting exercise. It is a complex and costly undertaking.

Adjustments to operations, information technology systems, tax reporting requirements, internal reporting and key performance metrics and the tracking of stock-based compensation. As IFRS grows in acceptance, most CPAs, financial statement preparers and auditors will have to become knowledgeable about the new rules. Other participants, such as actuaries and valuation experts who are engaged by management to assist in measuring certain assets and liabilities, who are not currently taught IFRS will have to undertake comprehensive training. Professional associations and industry groups will have to integrate IFRS into their training materials, publications, testing, and certification programs, and many colleges and universities will have to include IFRS in their curricula. New textbooks covering IFRS will have to be written.

International Financial Reporting Standards

Preface to International Financial Reporting Standards Framework for the Preparation and Presentation of Financial Statements

DUE PROCESS STEPS IN GENERAL The IASB develops IFRS in accordance with due process procedures outlined in its governing constitution (IASB 2006). The process involves public meetings and extensive input from interested parties around the world. The preface to IFRS sets out IASB's mission and objectives IFRSs, due process for developing IFRSs and Interpretations, and policies on effective dates, format, and language for IFRS. Due process refers to the procedures and a safeguard used to develop standards in the public interest and is designed to facilitate timely, thorough, and open study and deliberation of the continuing development of standards. Such due process includes deliberations in meetings open to the public and public exposure of working drafts Formal due process for projects normally, but not necessarily, involves the following steps. The steps that are required by the IASC Foundation Constitution are indicated by (*): 1. 2. 3. 4. 5. 6. Ask the staff to identify and review the issues associated with the topic and to consider the application of the Framework to the issues Study national accounting requirements and practice and exchange views about the issues with national standard-setters Consult the Standards Advisory Council about the advisability of adding the topic to the IASB's agenda* Form an advisory group (generally called a 'working group') to advise the IASB and its staff on the project Publish for public comment a discussion document Publish for public comment an exposure draft approved by vote of at least nine IASB members, including any dissenting opinions held by IASB members (in exposure drafts, dissenting opinions are referred to as 'alternative views')* 7. Publish within an exposure draft a basis for conclusions; 8. Consider all comments received within the comment period on discussion documents and exposure drafts* 9. Consider the desirability of holding a public hearing and the desirability of conducting field tests and, if considered desirable, holding such hearings and conducting such tests; 10. Approve a standard by at least votes of at least nine IASB members and include in the published standard any dissenting opinions* and 11. Publish within a standard a basis for conclusions, explaining, among other things, the steps in the IASB's due process and how the IASB dealt with public comments on the exposure draft. Due Process for IFRS Due process steps for a Standard will normally include the following (* below means required by IASB Constitution):

staff work to identify and study the issues study of existing national standards and practices IASB consults with SAC about the advisability of adding the project to the IASB's agenda* IASB normally forms an advisory group IASB publishes a discussion document for comment IASB considers comments received on the discussion document IASB publishes an exposure draft with at least 9 affirmative votes* (the exposure draft will include dissenting opinions and basis for conclusions) IASB considers comments received on the exposure draft* IASB considers the desirability of holding a public hearing and of conducting field tests* IASB approves the final Standard with at least 9 affirmative votes* (the Standard will include dissenting opinions and basis for conclusions)

IASB deliberates in meetings open to public observation. Due Process for Interpretations Interpretations of IFRS will be developed by the IFRS Interpretations Committee (IFRIC) for approval by IASB Due process steps for an Interpretation will normally include (* below means required by IASB Constitution):

Staff work to identify and study the issues and existing national standards and practices IFRIC studies national standards and practices IFRIC publishes a draft Interpretation for comment if no more than 4 IFRIC Members have voted against the proposal*

IFRIC considers comments received on the draft Interpretation within a reasonable period of time IFRIC approves the final Interpretation if no more than 4 IFRIC Members have voted against the proposal and submits it to IASB* IASB approves the final Interpretation by at least 9 affirmative votes of IASB*

IFRIC deliberates in meetings open to public observation

International Financial Reporting Standards IFRS 1 First-time Adoption of International Financial Reporting Standards IFRS 2 Share-based Payment IFRS 3 Business Combinations IFRS 4 Insurance Contracts IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IFRS 6 Exploration for and Evaluation of Mineral Assets IFRS 7 Financial Instruments: Disclosures IFRS 8 Operating Segments IFRS 9 Financial Instruments IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements IFRS 12 Disclosure of Interests in Other Entities IFRS 13 Fair Value Measurement International Accounting Standards IAS 1 Presentation of Financial Statements IAS 2 Inventories IAS 3 Consolidated Financial Statements Originally issued 1976. Superseded in 1989 by IAS 27 and IAS 28 IAS 4 Depreciation Accounting Withdrawn in 1999, replaced by IAS 16, 22, and 38, all of which were issued or revised in 1998 IAS 5 Information to Be Disclosed in Financial Statements Originally issued October 1976. Superseded by IAS 1 in 1997 IAS 6 Accounting Responses to Changing Prices Superseded by IAS 15, which was withdrawn December 2003 IAS 7 Statement of Cash Flows IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 9 Accounting for Research and Development Activities Superseded by IAS 38 effective 1.7.99 IAS 10 Events After the Reporting Period IAS 11 Construction Contracts IAS 12 Income Taxes IAS 13 Presentation of Current Assets and Current Liabilities Superseded by IAS 1 IAS 14 Segment Reporting - IAS 14 is superseded by IFRS 8 Operating Segments effective for annual periods beginning 1 January 2009 IAS 15 Information Reflecting the Effects of Changing Prices Withdrawn December 2003 IAS 16 Property, Plant and Equipment IAS 17 Leases IAS 18 Revenue IAS 19 Employee Benefits IAS 20 Accounting for Government Grants and Disclosure of Government Assistance IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 22 Business Combinations Superseded by IFRS 3 effective 31 March 2004 IAS 23 Borrowing Costs IAS 24 Related Party Disclosures IAS 25 Accounting for Investments Superseded by IAS 39 and IAS 40 effective 2001 IAS 26 Accounting and Reporting by Retirement Benefit Plans IAS 27 Consolidated and Separate Financial Statements Superseded by IFRS 10, IFRS 12 and IAS 27 (rev. 2011) effective 2013 IAS 28 Investments in Associates Superseded by IAS 28 (rev. 2011) and IFRS 12 effective 2013 IAS 29 Financial Reporting in Hyperinflationary Economies IAS 30 Disclosures in the Financial Statements of Banks and Similar Financial Institutions Superseded by IFRS 7 effective 2007 IAS 31 Interests In Joint Ventures Superseded by IFRS 11 and IFRS 12 effective 2013 IAS 32 Financial Instruments: Presentation Disclosure provisions Superseded by IFRS 7 effective 2007 IAS 33 Earnings Per Share IAS 34 Interim Financial Reporting IAS 35 Discontinuing Operations Superseded by IFRS 5 effective 2005 IAS 36 Impairment of Assets IAS 37 Provisions, Contingent Liabilities and Contingent Assets IAS 38 Intangible Assets IAS 39 Financial Instruments: Recognition and Measurement Superseded by IFRS 9 effective 2013 IAS 40 Investment Property IAS 41 Agriculture Final Interpretations Issued by the IFRS Interpretations Committee IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities

IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments IFRIC 3 Emission Rights - Withdrawn June 2005 IFRIC 4 Determining Whether an Arrangement Contains a Lease IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IFRIC 6 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies IFRIC 8 Scope of IFRS 2 - Withdrawn effective 1 January 2010 IFRIC 9 Reassessment of Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment IFRIC 11 IFRS 2: Group and Treasury Share Transactions - Withdrawn effective 1 January 2010 IFRIC 12 Service Concession Arrangements IFRIC 13 Customer Loyalty Programmes IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction IFRIC 15 Agreements for the Construction of Real Estate IFRIC 16 Hedges of a Net Investment in a Foreign Operation IFRIC 17 Distributions of Non-cash Assets to Owners IFRIC 18 Transfers of Assets from Customers IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments Final Interpretations Issued by the Standing Interpretations Committee SIC 1 Consistency Different Cost Formulas for Inventories Superseded SIC 2 Consistency Capitalisation of Borrowing Costs Superseded SIC 3 Elimination of Unrealised Profits and Losses on Transactions with Associates Superseded SIC 5 Classification of Financial Instruments - Contingent Settlement Provisions Superseded SIC 6 Costs of Modifying Existing Software Superseded SIC 7 Introduction of the Euro SIC 8 First-Time Application of IASs as the Primary Basis of Accounting Superseded SIC 9 Business Combinations Classification either as Acquisitions or Unitings of Interests Superseded SIC 10 Government Assistance No Specific Relation to Operating Activities SIC 11 Foreign Exchange Capitalisation of Losses Resulting from Severe Currency Devaluations Superseded SIC 12 Consolidation Special Purpose Entities SIC 13 Jointly Controlled Entities Non-Monetary Contributions by Venturers SIC 14 Property, Plant and Equipment Compensation for the Impairment or Loss of Items Superseded SIC 15 Operating Leases Incentives SIC 16 Share Capital Reacquired Own Equity Instruments (Treasury Shares) Superseded SIC 17 Equity Costs of an Equity Transaction Superseded SIC 18 Consistency Alternative Methods Superseded SIC 19 Reporting Currency Measurement and Presentation of Financial Statements under IAS 21 and IAS 29 Superseded SIC 20 Equity Accounting Method Recognition of Losses Superseded SIC 21 Income Taxes Recovery of Revalued Non-Depreciable Assets SIC 22 Business Combinations Subsequent Adjustment of Fair Values and Goodwill Initially Reported Superseded SIC 23 Property, Plant and Equipment Major Inspection or Overhaul Costs Superseded SIC 24 Earnings Per Share Financial Instruments and Other Contracts that May Be Settled in Shares Superseded SIC 25 Income Taxes Changes in the Tax Status of an Enterprise or its Shareholders SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease SIC 28 Business Combinations 'Date of Exchange' and Fair Value of Equity Instruments Superseded SIC 29 Disclosure Service Concession Arrangements SIC 30 Reporting Currency Translation from Measurement Currency to Presentation Currency Superseded SIC 31 Revenue Barter Transactions Involving Advertising Services SIC 32 Intangible Assets Web Site Costs SIC 33 Consolidation and Equity Method Potential Voting Rights and Allocation of Ownership Interests Superseded ** IPSAS STANDARDS LISTING (FYI) IPSAS1 Presentation of Financial Statements IPSAS 2 Cash Flow Statements IPSAS 3 Net Surpluses or Deficit for the Period - Fundamental Errors and Changing in Accounting Policies IPSAS 4 The Effects of changes in Foreign Exchange Rates IPSAS 5 Borrowing Costs IPSAS 6 Consolidated Financial Statements Accounting for Controlled Entities IPSAS 7 Accounting for Investments in Associates IPSAS 8 Financial Reporting of Interests in Joint Ventures IPSAS 9 Revenue from Exchange Transactions IPSAS10 Financial Reporting in Hyperinflationary Economies IPSAS 11 Construction Contracts IPSAS 12 Inventories IPSAS 13 Leases IPSAS 14 Events after the Reporting Date

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IPSAS 15 Financial Instruments: Disclosure and Presentation IPSAS 16 Investment Property IPSAS 17 Properties, Plant and Equipment IPSAS 18 Segment Reporting IPSAS 19 Provisions, Contingent Liabilities, Contingent Assets IPSAS 20 Related Party Disclosures IPSAS 21 Impairment of Non-cash-generating Assets IPSAS 22 Disclosure of Financial Information About the General Government Sector IPSAS 23 Revenue from Non-Exchange Transactions (Taxes and Transfers) IPSAS 24 Presentation of Budget Information in Financial Statements IPSAS 25 Employee Benefits IPSAS 26 Impairment of Cash-Generating Assets IPSAS 27 Agriculture IPSAS 28 Financial Instruments - Presentation IPSAS 29 Financial Instruments IPSAS 30 Financial Instruments - Disclosure

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IFRS COVERAGE IN HCBA 3201 (JKUAT MBA PROGRAMME): SESSION / TOPIC / LEARNING ISSUED / LAST ACTIVITY IFRS/IAS/IFRC/SIC IFRS/IAS/IFRC/SIC OBJECTIVES REVISED Week 2: Accounting IAS 1 Presentation ofTo prescribe the basis for presentation of16 June 2011 concepts, and primary Financial Statements general purpose financial statements, to ensure financial terminology comparability both with the entity's financial statements of previous periods and with the financial statements of other entities. IAS 7 Statement of CashTo require the presentation of information1 July 2009 Flows about the historical changes in cash and cash equivalents of an entity by means of a statement of cash flows, which classifies cash flows during the period according to operating, investing, and financing activities. IAS 18 Revenue To prescribe the accounting treatment for16 April 2009 revenue arising from certain types of transactions and events. IAS 11 Contracts ConstructionTo prescribe the accounting treatment of December 1993 revenue and costs associated with construction contracts IFRS 5 Non-currentTo prescribe accounting for discontinued16 April 2009 Assets Held for Sale andoperations and the presentation of such Discontinued Operations operations and long-lived assets that are being disposed of, and the impairment recognition and measurement of such assets IAS 8 AccountingTo prescribe the criteria for selecting and 18 December 2003 Policies, Changes inchanging accounting policies, together with the Accounting Estimates andaccounting treatment and disclosure of changes Errors in accounting policies, changes in accounting estimates and corrections of errors. The Standard is intended to enhance the relevance and reliability of an entitys financial statements, and the comparability of those financial statements over time and with the financial statements of other entities IAS 37 Provisions,To ensure that appropriate recognition criteria September 1998 Contingent Liabilities andand measurement bases are applied to Contingent Assets provisions, contingent liabilities and contingent assets and that sufficient information is disclosed to enable users to understand their nature, timing and amount. The key principle established by the Standard is that a provision should be recognised only when there is a liability i.e. a present obligation resulting from past events. IAS 10 Events After theTo prescribe: (a) when an entity should adjust 18 December 2003 Reporting Period its financial statements for events after the reporting period; and (b) the disclosures that an entity should give about the date when the financial statements were authorised for issue and about events after the reporting period.

EFFECTIVE DATE 1 July 2012 - Effective date of June 2011 amendments to IAS 1 1 January 2010 Effective date of the April 2009 revisions to IAS 7 Appendix to IAS 18 amended for Annual Improvements to IFRSs 2009 1 January 1995 Effective date of IAS 11 (1993) 1 January 2010 Effective date of the April 2009 revisions to IFRS 5 1 January 2005 Effective date of IAS 8(2003)

1 July 1999 - Effective date of IAS 37 (1998)

Management To assist management in presenting useful 23 June 2009 Commentary (IFRSmanagement commentary that relates to Practice Statements). Thefinancial statements that have been prepared in Practice Statement is notaccordance with International Financial an IFRS. Reporting Standards (IFRSs).

1 January 2005 Effective date of IAS 10 (Revised 2003) / 6 September 2007 Retitled Events after the Reporting Period as a consequential amendment resulting from revisions to IAS 1 8 December 2010 IFRS Practice Statement Management Commentary published by the IASB

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Week 3: Accounting policies and IFRS

Preface

Sets out IASB's objectives, the scope of IFRSs,December 2007 due process, and policies on effective dates, format, and language for IFRSs

Framework

The Conceptual Framework sets out theSeptember 2010 concepts that underlie the preparation and presentation of financial statements for external users.

IFRS 1 First-timeTo ensure that an entitys first IFRS financial20 December 2010 Adoption of Internationalstatements, and its interim financial reports for Financial Reportingpart of the period covered by those financial Standards statements, contain high quality information that: (a) is transparent for users and comparable over all periods presented; (b) provides a suitable starting point for accounting in accordance with International Financial Reporting Standards (IFRSs); and (c) can be generated at a cost that does not exceed the benefits. Week 4: Company IAS 33 Earnings PerTo prescribe principles for determining and7 August 2008 Ratio Analysis Share presenting earnings per share (EPS) amounts to improve performance comparisons between different entities in the same reporting period and between different reporting periods for the same entity. Week 5: Analysis of IAS 2 Inventories To prescribe the accounting treatment for18 December 2003 Inventories inventories. It provides guidance for determining the cost of inventories and for subsequently recognising an expense, including any write-down to net realisable value. It also provides guidance on the cost formulas that are used to assign costs to inventories. Week 6 & 7: Analysis IAS 16 Property, Plant To prescribe the accounting treatment for 22 May 2008 of Long-Lived Assets and Equipment property, plant, and equipment. The principal issues are the recognition of assets, the determination of their carrying amounts, and the depreciation charges and impairment losses to be recognised in relation to them. IAS 38 Intangible Assets To prescribe the accounting treatment for16 April 2009 intangible assets that are not dealt with specifically in another IFRS. The Standard requires an entity to recognise an intangible asset if, and only if, certain criteria are met. The Standard also specifies how to measure the carrying amount of intangible assets and requires certain disclosures regarding intangible assets. IAS 40 InvestmentTo prescribe the accounting treatment for22 May 2008 Property investment property and related disclosure requirements. IAS 36 Impairment ofTo ensure that assets are carried at no more16 April 2009 Assets than their recoverable amount, and to define how recoverable amount is determined. IAS 23 Borrowing Costs To prescribe the accounting treatment for22 May 2008 borrowing costs. Borrowing costs include interest on bank overdrafts and borrowings, amortisation of discounts or premiums on borrowings, finance charges on finance leases and exchange differences on foreign currency borrowings where they are regarded as an

December 2007 Amendments to Preface approved by the IASB reflecting increase in size of IFRIC to 14 members September 2010 Conceptual Framework for Financial Reporting 2010 (the IFRS Framework) approved by the IASB 1 July 2011 - Effective date of May 2010 amendment to IFRS 1

1 January 2009 Effective date of consequential amendments arising from IAS 1 (2007) 1 January 2005 Effective date of IAS 2 (Revised 2003)

1 January 2009 Effective date of May 2008 amendment to IAS 16 1 July 2009 - Effective date of the April 2009 revisions to IAS 38

1 January 2009 Effective date of the May 2008 revisions to IAS 40 1 January 2010 Effective date of the April 2009 revisions to IAS 36 1 January 2009 Effective date of May 2008 amendment to IAS 23

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adjustment to interest costs.

IFRS 13 Fair Measurement Week 8: Analysis of Income Taxes

ValueTo define fair value, set out in a single IFRS a12 May 2011 framework for measuring fair value and require disclosures about fair value measurements. IAS 12 Income Taxes To prescribe the accounting treatment for20 December 2010 income taxes. To prescribe, for lessees and lessors, the16 April 2009 appropriate accounting policies and disclosures to apply in relation to finance and operating leases.

Week 9: Analysis of IAS 17 Leases Financing Liabilities, Leases and OffBalance Sheet Debt

Week 10: Pensions and IAS 26 Accounting andTo specify measurement and disclosure1 January 1990 Other Employee Reporting by Retirementprinciples for the reports of retirement benefit Benefits Benefit Plans plans. All plans should include in their reports a statement of changes in net assets available for benefits, a summary of significant accounting policies and a description of the plan and the effect of any changes in the plan during the period. IAS 19 EmployeeTo prescribe the accounting and disclosure for16 June 2011 Benefits employee benefits (that is, all forms of consideration given by an entity in exchange for service rendered by employees). The principle underlying all of the detailed requirements of the Standard is that the cost of providing employee benefits should be recognised in the period in which the benefit is earned by the employee, rather than when it is paid or payable. Week 11: InterIAS 27 Consolidated and Has the twin objectives of setting standards to 6 May 2010 corporate Investments, Separate Financial be applied: (a) in the preparation and Business Statements Superseded presentation of consolidated financial Combinations and by IFRS 10, IFRS 12 and statements for a group of entities under the Multinational IAS 27 (rev. 2011) control of a parent; and (b) in accounting for Operations effective 2013 investments in subsidiaries, jointly controlled entities, and associates when an entity elects, or is required by local regulations, to present separate (non-consolidated) financial statements. IAS 28 Investments in IAS 28 applies to all investments in which an 1 January 2009 Associates Superseded investor has significant influence but not by IAS 28 (rev. 2011) and control or joint control except for investments IFRS 12 effective 2013 held by a venture capital organisation, mutual fund, unit trust, and similar entity that are designated under IAS 39 to be at fair value with fair value changes recognised in profit or loss. IFRS 10 Consolidated To to establish principles for the presentation 12 May 2011 Financial Statements and preparation of consolidated financial statements when an entity controls one or more other entities. IAS 31 Interests In Joint IAS 31 applies to accounting for all interests in 1 January 2009 Ventures Superseded by joint ventures and the reporting of joint venture IFRS 11 and IFRS 12 assets, liabilities, income, and expenses in the effective 2013 financial statements of venturers and investors, regardless of the structures or forms under which the joint venture activities take place, except for investments held by a venture capital organisation, mutual fund, unit trust, and similar entity that (by election or

1 January 2013 Effective date of IFRS 13 1 January 2012 Effective date of the December 2010 revisions 1 January 2010 Effective date of the April 2009 revisions to IAS 17, with early application permitted (with disclosure) 1994 IAS 26 was reformatted

1 January 2013 Effective date of June 2011 amendments to IAS 19

1 July 2010 - Effective date of May 2010 amendment to IAS 27

1 July 2009 - Effective date of January 2008 amendments to IAS 28

1 January 2013 Effective date of IFRS 10 1 July 2009 - Effective date of the January 2008 revisions to IAS 31

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requirement) are accounted for as under IAS 39 at fair value with fair value changes recognised in profit or loss.

IFRS 11 Arrangements

Joint

12 May 2011 12 May 2011

IFRS 12 Disclosure of Interests in Other Entities IFRS 3 Business Combinations

To improve the relevance, reliability and 6 May 2010 comparability of the information that a reporting entity provides in its financial statements about a business combination and its effects IFRS 8 Operating To prescribe requirements for disclosure of 16 April 2009 Segments information about an entitys operating segments and also about the entitys products and services, the geographical areas in which it operates, and its major customers. IAS 21 The Effects of To prescribe how to include foreign currency 10 January 2008 Changes in Foreign transactions and foreign operations in the Exchange Rates financial statements of an entity and how to translate financial statements into a presentation currency. The principal issues are which exchange rate(s) to use and how to report the effects of changes in exchange rates in the financial statements. Week 13: Analysis of IFRS 7 FinancialTo require entities to provide disclosures in1 January 2011 Derivative and Instruments: Disclosures their financial statements that enable users to Hedging Activities evaluate: (a) the significance of financial instruments for the entitys financial position and performance; and (b) the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the end of the reporting period, and how the entity manages those risks. IAS 39 FinancialTo prescribe accounting financial assets and12 November 2009 Instruments: Recognitionliabilities. Parts of IAS 39 are being superseded and Measurement and will become obsolete for annual periods Superseded by IFRS 9beginning on or after 1 January 2013. effective 2013 Proposals to replace the requirements on impairment have been published and proposals on hedge accounting are expected to be published in 2010 IAS 32 FinancialTo establish principles for presenting financial 14 February 2008 Instruments: Presentationinstruments as liabilities or equity and for Disclosure provisionsoffsetting financial assets and liabilities Superseded by IFRS 7 effective 2007 IFRS 9 Financial To establish principles for the financial 28 October 2010 Instruments reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entitys future cash flows. Other Standards in IFRS 2 Force (not mentioned, Payment covered, or refered to in HBC 3210) Share-basedTo specify the financial reporting by an entity 18 June 2009 when it undertakes a share-based payment transaction. In particular, it requires an entity to reflect in its profit or loss and financial position the effects of share-based payment transactions, including expenses associated

1 January 2013 Effective date of IFRS 11 1 January 2013 Effective date of IFRS 12 1 July 2010 - Effective date of May 2010 amendment to IFRS 3 1 January 2010 Effective date of the April 2009 amendments to IFRS 8 1 July 2009 - Effective date of the January 2008 amendments

1 July 2011 - Effective date of October 2010 amendment to IFRS 7 related to transfers of financial assets

12 November 2009 Classification and measurement provisions of IAS 39 replaced by IFRS 9 effective 1 January 2013, with earlier application permitted 1 January 2009 Effective date of amendments of February 2008 1 January 2013 Effective date of IFRS 9, with early adoption permitted starting in 2009

1 January 2010 Effective date of the June 2009 revisions to IFRS 2

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with transactions in which share options are granted to employees

IFRS 4 Contracts

InsuranceTo specify the financial reporting for insurance 18 August 2005 contracts by any entity that issues such contracts (an insurer) until the Board completes the second phase of its project on insurance contracts. IFRS 6 Exploration forTo specify the financial reporting for the 1 January 2006 and Evaluation of Mineralexploration for and evaluation of mineral Assets resources. IAS 20 Accounting forTo prescribe the accounting for, and disclosure 22 May 2008 Government Grants andof, government grants and other forms of Disclosure of Governmentgovernment assistance Assistance IAS 24 Related PartyTo ensure that an entity's financial statements 4 November 2009 Disclosures contain the disclosures necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances with such parties IAS 29 FinancialTo establish specific standards for entities 22 May 2008 Reporting inreporting in the currency of a hyperinflationary Hyperinflationary economy, so that the financial information Economies provided is meaningful IAS 34 Interim FinancialTo prescribe the minimum content of an 30 June 2005 Reporting interim financial report and to prescribe the principles for recognition and measurement in financial statements presented for an interim period IAS 41 Agriculture To establish standards of accounting for 22 May 2008 agricultural activity the management of the biological transformation of biological assets (living plants and animals) into agricultural produce (harvested product of the entity's biological assets)

18 August 2005 Amendment to IFRS 4 for financial guarantee contracts 1 January 2006 1 January 2009 Effective date of May 2008 amendment to IAS 20 1 January 2011 Effective date of IAS 24 (2009)

1 January 2009 Effective date of the May 2008 revisions to IAS 29 1 January 2011 Effective date of May 2010 amendment to IAS 34 1 January 2009 Effective date of the May 2008 revisions to IAS 41

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