CHAPTER 1 FINANCIAL REPORTING &ACCOUNTING STANDARD Resume By Cahyo Priyatno, SE, AK, CPMA, CA A.

GLOBAL MARKET FINANCIAL STATEMENT AND FINANCIAL REPORTING Accounting: the universal language of business Characteristic of accounting Bersifat kwantitatif keuangan (Rp, US$, dsb) Financial accounting = General accounting (Akuntansi keuangan) Menghasilkan informasi yang disajikan kepada semua pihak di luar perusahaan (pemakai laporan keuangan, terutama investor / calon investor, kreditor / calon kreditor, dsb) melalui laporan keuangan bertujuan umum sifat informasi general purposes. Management accounting = Managerial Accounting (Akuntansi Manajemen) Menghasilkan informasi yang disajikan kepada manajemen fungsi tertentu, tingkat tertentu, untuk kepentingan tertentu sifat informasi single purpose Financial statement Financial reporting

ACCOUNTING AND CAPITAL ALLOCATION Resources are limited people try to conserve them & ensure that they are used effectively. Accountants must measure performance accurately and fairly on a timely basis. relevant financial information that faithfully Effective process of capital allocation: critical to a healthy economy promotes productivity, encourage innovation, and provides an efficient and liquid market and vv. HIGH-QUALITY STANDARD Efficient capital allocation relevant information & a faithful representation a single, widely accepted set of high- quality of international accounting standards Elements of a single set of high-quality international accounting standard: 1) Single set of high-quality accounting standard established by a single setting body. 2) Consistency in application and interpretation. 3) Common disclosures. 4) Common high-quality auditing standard and practices. 5) Common approach to regulatory review and enforcement. 6) Common delivery systems 7) Common approach to corporate government and legal frameworks around the world. B. OBJECTICE OF FINANCIAL REPORTING
1

The objective of general purposes of financial reporting: to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decision in the capacity as capital providers. GENERAL-PURPOSES OF FINANCIAL STATEMENTS Reason: at the least costs the most useful information possible. CAPITAL PROVIDERS The primarily user group for general purposes financial statement. Identifying investors ENTITY PERSPECTIVE An entity perspective is adopted. Companies are viewed as separate and distinct from their owners Should be focused only on the needs of shareholders (proprietary is not considered appropriate). DECISION-USEFULNESS Investors are interested in assessing the companys: Ability to generate net cash inflows, Managements ability to protect and enhance the capital providers investments. financial reporting should therefore help investors assess the amounts, timing, and uncertainty of prospective cash inflows from dividends or interest, and the proceeds from the sale, redemption, or maturity of securities or loans. C. STANDAR SETTING ORGANIZATIONS For many years: many nations have relied on their own standard-setting organization. IASB (International Accounting Standard Board) issues IFRS: IFRS & IAS IOSCO (International Organization of Securities Commissions) is dedicated to ensuring that the global markets can operate in an efficient and effective basis. IASB (International Accounting Standard Board) Standard setting structure internationally composed of: IASB (International Accounting Standard Boards) IASCF (International Accounting Standards Committee Foundation) Standard Advisory Council IFRIC (International Reporting Interpretations Committee) DUE PROCESS TYPES OF PRONOUNCEMENTS 1) Standards, interpretations, and staff positions. 2) Financial accounting concepts
2

3) Emerging issues task force statements. D. FINANCIAL REPORTING CHALLENCES IMPROVEMENTS IN ACCOUNTING STANDARDS SEC WORK PLAN 1) Sufficient Development and Application of IFRS 2) Independent Standard-Setting for the Benefit of Investors 3) Investors Understanding and Education. 4) Regulatory Environment 5) Impact on Large and Small Financial Statement Preparers 6) Human Capita readiness 7) Anticipated Timing of Future Rule-Making