“You don’t really understand
something unless you can explain it to your grandmother.”
Albert
Einstein
Hello!
It’s another edition of IFRS
is easy.
As a reminder, let me quickly make some additional
highlights on the Introduction to IFRS
and its Conceptual Framework discussed in the previous edition.
Have you ever wondered whether IFRS is based on principles
or rules?
Imagine you came to my
office to make some enquiries and I offered you a cup of coffee. Hanging close
to my office window is a picture I took when I was 10 years old. You didn’t
even notice it. I then told you that you can’t go near to see it clearly cos I
don’t allow people that are not close to me to see the picture. After some
minutes of discussion, I stepped out to get a file from one of my colleagues.
Let’s face it, if you were in that office the minute I stepped out, wouldn’t
you think of stealing a second to take a closer look at the picture?
I can guess. That’s what rules do to us. Rules harden one’s
heart and makes one look for ways to beat them.
Most local accounting standards are rules-based. This makes
Accountants look for the loopholes in them so as to cheat the system. This and
other factors were considered when the IASB decided to create standards that
are principles-based. Hence, IFRS were developed on a principles-based system.
Yeah, so let’s test your understanding so far. Click below
to view or download questions on Conceptual Framework and the solutions. Try
and make attempts to solve them before scrolling to the solutions section.
Kindly drop your comments, opinions and questions in the
comment box.
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