Standard setting, the conceptual framework and ethics

Review questions

Integrated summary: Standard setting, the conceptual framework and ethics

Start with the present right or duty, then test control and the past event before recognition and measurement. Unreceived prepaid service may remain an asset; expected staff loyalty is not a controlled right. The IASB develops accounting Standards and the ISSB sustainability disclosure Standards, while ACCA administers DipIFR. Under management pressure, document the evidence, estimate and requested correction, then escalate through authorised channels rather than changing an amount to hide its effect.

Review questions

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Question 1An entity has prepaid for a contractual future service and expects additional returns from trained employees' loyalty, although it cannot require them to stay. Which analysis identifies the present economic resource? Both future service and expected loyalty are assets because each may generate benefit. Only loyalty is an asset because its forecast return may exceed the prepayment. There is no asset because the future service has not yet been consumed. The remaining service right is a controlled resource; expected loyalty alone does not establish a controlled right.
Question 2An accountant tells the director that an existing obligation estimate rose from 90 to 120 thousand before authorisation. The director asks to retain 90 to protect profit. Which professional response best follows the lesson? Keep 90 because the director alone is responsible for the statements. Post 120 secretly without documenting or escalating the matter. Document the estimate and support, seek correction, then escalate through the authorised professional route if refused. Defer the issue to next year because it arose before authorisation.