P2:Corporate Reporting (CR)
周冬华
1
About myself ——Introduce briefly
 A guy(1982—)
 Graduated from Fudan University on June, 2010, and got
the PHD diploma of accounting
 2007.9-2008.9, as a visiting scholar in France, sponsored
by the CSC (China Scholarship Committee)
 2012.3-2012.9 , as a visiting scholar in New Zealand
 enrolled CPA, Given CPA lectures in SHUFE
 Published articles in magazines, such as audit research
 2010-2013, honored as Best teacher in JXUFE
 2013-2016, an project of financial analysts funded by the
NSCF
CopyRight 2013 By 周冬华 博士
CPA
2
How to learn P2?
 The aim to learning P2
 PASS the EXAM?
 learn more knowledge
 get a better job
 The conflict between book and time
 Little time, total up 48 class hours
 Many book knowledge
 What can we do?
 how should we do ?
CopyRight 2013 By 周冬华 博士
CPA
3
session ACCA Global pass rates December 2012
 Paper F6, Taxation, 47%
Paper F7, Financial Reporting, 53%
Paper F8, Audit and Assurance, 34%
Paper F9, Financial Management, 43%
 Paper P1, Governance, Risk and Ethics, 50%
Paper P2, Corporate Reporting, 49%
Paper P3, Business Analysis, 48%
Paper P4, Advanced Financial Management, 33%
Paper P5, Advanced Performance Management, 33%
Paper P6, Advanced Taxation, 44%
Paper P7, Advanced Audit and Assurance, 32%
 What about you?
CopyRight 2013 By 周冬华 博士
CPA
introduction
Syllabus
CopyRight 2013 By 周冬华 博士
CPA
5
AIM
 To apply knowledge, skills and exercise professional
judgement in the application and evaluation of financial
reporting principles and practices in a range of business
contexts and situations.
CopyRight 2013 By 周冬华 博士
CPA
6
Main capabilities








1. Discuss the professional and ethical duties of the accountant
2. Evaluate the financial reporting framework
3. Advise on and report the financial performance of entities
4. Prepare the financial statements of groups of entities in
accordance with relevant accounting standards
5. Explain reporting issues relating to specialised entities
6. Discuss the implications of changes in accounting regulation
on financial reporting
7. Appraise the financial performance and position of entities
8. Evaluate current development
CopyRight 2013 By 周冬华 博士
CPA
EXAM Format – 15 minutes & 3 hours
 Section A - No choice - 50 marks
 35 marks group numbers
Comprehensive income statement or s of fp or cash
flow
 15 marks = ethics OPPIC & accounting issue
 Section B 2 from 3
 Make the choice in the reading time
 Q2 / Q3 – accounting standards
 Depth & application
 Financial instruments
 Q4 Current issues
CopyRight 2013 By 周冬华 博士
CPA
8
Current issue ：IFRS13 Fair Value Measurement
Definition
“The price that could be received to sell an asset (or paid to
transfer a liability) in an orderly transaction between market
participants at the measurement date.”
i.e. market based approach
Pre – transaction costs ignore (not a feature of the asset)
CopyRight 2013 By 周冬华 博士
CPA
9
FVM using
 Level 1 – observable in an active market
e.g. listed shares
 Level 2 – observable in an inactive market or for similar items
e.g. property
 Level 3 – unobservable inputs
e.g. deferred consideration / PV FCF Liabilities
CopyRight 2013 By 周冬华 博士
CPA
10
FVM
 Financial assets have to be initially measured at FV, one is
bought for $100 cash when it has a FV of $150.
 Possible ? Yes – RPT（Related Party Transaction） or
bargain
 Accounting is … gain of $50
CopyRight 2013 By 周冬华 博士
CPA
11
IFRS10 Consolidated Financial Statements
Why?
• USA joint project
• to prevent “off balance sheet finance”
• i.e. the non consolidation of highly geared controlled entities
• Principles based approach to control
• Power over the investee; exposure, or rights, to variable
returns, the ability to use its power to affect the amount of the
returns
CopyRight 2013 By 周冬华 博士
CPA
12
Is there control ?
 Consider the size of the holding and the dispersion of
holdings
 48% investment?
 Options? (potential voting rights)
 Contract?
CopyRight 2013 By 周冬华 博士
CPA
13
Leases
 IAS17 requires a classification between finance & operating
 Based on a judgment as to whether substantially all risks &
rewards pass
 Finance = asset, liability, depreciation & finance cost
 Operating = operating cost
CopyRight 2013 By 周冬华 博士
CPA
14
What’s new?
 Useful information has two fundamental characteristics
Relevant
 To be relevant, accounting information must be capable of
making a difference in a decision
 Predictive / confirmatory
CopyRight 2013 By 周冬华 博士
CPA
15
What’s new
 Useful information has two fundamental characteristics
Faithful representation




Complete
Neutral
Free from error
Reliable / substance over form / objective
CopyRight 2013 By 周冬华 博士
CPA
16
What’s new
• Useful information has four enhancing characteristics
1.
2.
3.
4.
Comparability
Verifiability
Timeliness
Understandability
CopyRight 2013 By 周冬华 博士
CPA
17
Main Examinable Documents






IAS 18 Revenue
IAS 19 Employee Benefits
IAS 31 Interests in Joint Ventures
IAS 33 Earnings per Share
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent
Assets
 IAS 39 Financial Instruments: Recognition and
Measurement
 IAS 40 Investment Property
 IFRS 9 Financial Instruments
CopyRight 2013 By 周冬华 博士
CPA
Part A REGULATORY AND ETHICAL FRAMEWORK
 Financial reporting framework
 Corporate governance:
 is the system by which companies are directed and
controlled （Cadbury Report）.
 Conceptual framework
The IASB’s Framework provides the backbone of the IASB‘s
conceptual framework. IASs were based on the IASB
Framework.
A conceptual framework is a statement of generally
accepted theoretical principles which form the frame of
reference for financial reporting.
CopyRight 2013 By 周冬华 博士
CPA
Professional and ethical duty of the accountant
 1 Ethical theory:
A key debate in ethical theory is whether ethics can be
determined by objective, universal principles. How important
the consequences of actions should be in determining an ethical
position is also a significant issue.
Ethical relativism and non-cognitivism: (伦理相对主义和非
认知主义)
Relativism is the view that a wide variety of acceptable ethical
beliefs and practices exist. The ethics that are most appropriate
in a given situation will depend on the conditions at that time.
Ethical absolutism and cognitivism:
Absolutism is the view that there is an unchanging set of ethical
principles that will apply to all situations, at all times and in all
CopyRight 2013 By 周冬华 博士 CPA
societies.
Influences on ethics:
 ethical decision making is influenced by individual and
situational factors.
Individual factors include age and gender, beliefs, education
and employment, how much control individuals believe they
have over their own situation and their personal integrity.
Kohlberg’s framework relates to individuals’ degree of
ethical maturity, the extent to which they can take their own
ethical decisions.
CopyRight 2013 By 周冬华 博士
CPA
 Situational factors include the systems of reward, authority
and bureaucracy, work roles, organizational factors, and the
national and cultural contexts.
Kohlberg’s cognitive moral development:
Level 1 pre-conventional （rewards/punishment/selfinterest）
Level 2 conventional
Level 3 post-conventional
Bureaucracy: is a system characterized by detailed rules
and procedures, impersonal hierarchical relations and a fixed
division of tasks.
CopyRight 2013 By 周冬华 博士
CPA
3.The social and ethical environment

Firms have to ensure they obey the law: but they also
face ethical concerns, because their reputations depend on a
good image.
Ethics: a set of moral principles to guide behaviour
Ethical problems facing managers
Social responsibility and businesses
CopyRight 2013 By 周冬华 博士
CPA
Ethics in organizations

Leadership practices and ethics
Two approaches to managing ethics:
A compliance-based approach is primarily designed to
ensure that the company acts within the letter of the law, and
that violations are prevented, detected and punished.
An integrity-based approach combines a concern for
the law with an emphasis on managerial responsibility for
ethical behavior.
CopyRight 2013 By 周冬华 博士
CPA
Principles and guidance on professional ethics
 A distinguishing mark of the accountancy profession is its
acceptance of the responsibility to act in the public interest.
The fundamental principles
Integrity – straightforward and honest
Objectivity – should not allow bias, conflict of interest
or undue influence of others
Professional competence and due care – members have
a continuing duty to maintain professional knowledge and
skill at a level required to ensure that a client or employer
receives the advantage of competent professional service
based on current developments in practice.
CopyRight 2013 By 周冬华 博士
CPA

Confidentiality – should not disclose, unless there is a
legal or professional right or duty to disclose
Professional behavior – comply with relevant laws and
regulations and should avoid any action that discredits the
profession
Ethical framework
CopyRight 2013 By 周冬华 博士
CPA
6.Practical situations

Consider the following:
. relationships – boss, subordinate, husband, friend
. consequences – survival of the company, company’s
reputation, company as a whole is amoral
. actions – informal discussions, further investigation,
tightening up of controls or the introduction of new ones,
attention to organizational matters
CopyRight 2013 By 周冬华 博士
CPA
Examination questions: an approach

In a situation involving ethical issues, there are practical
steps that should be taken:
. establish the facts of the situation by further
investigation and work
. consider the alternative options available for action
. consider whether any professional guidelines have been
breached
. state the best course of action based on the steps above
Use the terminology of the ethical guidelines:
Objectivity: integrity, fairness, bias, influence
Independence:
CopyRight 2013 By 周冬华 博士
CPA
Environmental and social reporting

1、Environmental reporting
Although not compulsory, environmental reports are
becoming increasing important. You should distinguish
-items that affect the financial statements （e.g. IAS 37）
.items that affect the environmental report
Financial reporting: environmental matters may be
reported in the accounts of companies in the following areas:
. contingent liabilities
. exceptional charges
. operating and financial review comments
. profit and capital expenditure forecasts
CopyRight 2013 By 周冬华 博士
CPA
 2 Sustainability
The Global Reporting Initiative （GRI）: arose from the
need to address the failure of the current governance
structures to respond to changes in the global economy.
3 dimensions of the conventional definition of
sustainability: economic, environmental, and social
CopyRight 2013 By 周冬华 博士
CPA

3 Social responsibility
The stakeholder view holds that there are many groups in
society with an interest in the organization’s activities. Some
firms have objectives for these issues. Some argue, however,
that a business’s only objective should be to make money: the
state, representing the public interest, can levy taxes to spend
on socially desirable projects or can regulate organizational
activities.
A company’s objectives in relation to wider society:
. protection of the environment,
. support for good causes
. a responsible attitude to product safety
CopyRight 2013 By 周冬华 博士
CPA

4 Human resource accounting: is an approach which
regards, people as assets.
Intellectual assets, or intellectual capital have 3 main
types:
. External assets
. internal assets
. competencies
CopyRight 2013 By 周冬华 博士
CPA