[PLEASE PUT HERE NAME OF THE TRANSLATED LANGUAGE]
GLOSSARY
The Advanced Program in Accounting and Auditing Regulation
TERM / DEFINITION / SOURCE / TRANSLATED TERMaccounting polices / The specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements / IAS 8.5
accrual basis of accounting / The effects of transactions and other events are recognized when they occur (and not as cash or its equivalent is received or paid) and they are recorded in the accounting records and reported in the financial statements of the periods to which they relate / IAS 12.5
adverse opinion / An adverse opinion is expressed when the effect of a disagreement is so material and pervasive to the financial statement that the auditor concludes that qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements. / IAASB
annual report / A document issued by an entity, ordinarily on an annual basis, which includes its financial statements together with the auditor’s report there on. / IAASB
asset / A resource:
(a)controlled by an entity as a result of past events; and
(b)from which future economic benefits are expected to flow to the entity. / IAS 38.8, (F.49(a))
associate / An entity, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture / IAS 28.2
audit evidence / All of the information used by the auditor in arriving at the conclusions on which the audit opinion is based. Audit evidence includes the information contained in the accounting records underlying the financial statements and other information / IAASB
audit firm / A sole practitioner, partnership or corporation or other entity of professional accountants. / IAASB
audit of financial statements / The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all materials respects, in accordance with an applicable financial reporting framework. An audit of financial statements is an assurance engagement (see Assurance engagement) / IAASB
audit opinion / The auditor’s report contains a clear written expression of opinion on the financial statements. An unqualified opinion is expressed when the auditor concludes that the financial statements give a true and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting framework. / IAASB
auditor / The engagement partner. The term “auditor” is used to describe either the engagement partner or the audit firm. Where it applies to the engagement partner, it describes the obligations or responsibilities of the engagement partner. Such obligations or responsibilities may be fulfilled by either the engagement partner or a member of the audit team. Where it is expressly intended that the obligation or responsibility be fulfilled by the engagement partner, the term “engagement partner” rather than “auditor” is used. (The term “auditor” may be used when describing related services and assurance engagements other than audits. Such reference is not intended to imply that a person performing a related service or assurance engagement other than an audit need necessarily be the auditor of the entity’s financial statements.) / IAASB
business combination / The bringing together of separate entities or businesses into one reporting entity. / IFRS 3.A
capital / Under a financial concept of capital, such as invested money or invested purchasing power, the net assets or equity of the entity. The financial concept of capital is adopted by most entities.
Under a physical concept of capital, such as operating capability, the productive capacity of the entity based on, for example, units of output per day. / F.102
carrying amount / The amount at which an asset is recognized after deducting any accumulated depreciation (amortization) and accumulated impairment losses thereon. / IAS 36.6, IAS 16.6, IAS 38.8
cash flows / Inflows and outflows of cash and cash equivalents. / IAS 7.6
comparatives / Comparatives in financial statements, may present amounts (such as financial position, results of operations, cash flows) and appropriate disclosures for an entity for more than one period, depending on the framework. The framework and methods of presentation are as follows:
(a)Corresponding figures where amounts and other disclosures for the preceding are included as part of the current period financial statements, and are intended as part of the current period financial statements, and are intended to be read in relation to the amounts of other disclosures relating to the current period (referred to as “current period figures”). These corresponding figures are not presented as complete financial statements capable of standing alone, but are an integral part of the current period financial statements intended to be read only in relationship to the current period figures.
(b)Comparative financial statements where amounts and other disclosures for the preceding period are included for comparison with the financial statements of the current period, but do not form part of the current period financial statements. / IAASB
consolidated financial statements / The financial statements of a group presented as those of a single economic entity. / IAS 27.4, IAS 28.2
corporate governance / Describes the role of persons entrusted with the supervision, control and direction of an entity. Those charged with governance ordinarily are accountable for ensuring that the entity achieves its objectives, financial reporting, and reporting to interested parties. Those charged with governance include management only when it performs such functions. / IAASB
derivative / A financial instrument or other contract within the scope of this Standard (see paragraphs 2-7) with all three of the following characteristics:
(a)its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’);
(b)it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and
(c)it is settled at a future date. / IAS 39.9
disclaimer of opinion / A disclaimer of opinion is expressed when the possible effect of a limitation on scope is so material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and accordingly is unable to express an opinion on the financial statements.
economic life / Either:
(a) the period over which an asset is expected to be economically usable by one or more users; or
(b) the number of production or similar units expected to be obtained from the asset by one or more users. / IAS 17.4
effective interest method / The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see IAS 18), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to estimate reliably the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments). / IAS 39.9
emphasis of matter paragraph / An auditor’s report may be modified by adding an emphasis of matter paragraph(s) to highlight a matter affecting the financial statements which is included in a note to the financial statements that more extensively discuss the matter. The addition of such an emphasis of matter paragraph(s) does not affect the auditor’s opinion. The auditor may also modify the auditor’s report by using an emphasis of matter paragraph(s) to report matters other than those affecting the financial statements / IAASB
equity / The residual interest in the assets of the entity after deducting all its liabilities. / F.49(c)
equity method / A method of accounting whereby the investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the investee. The profit or loss of the investor includes the investor's share of the profit or loss of the investee. / IAS 28.2
external audit / An audit performed by an external auditor / IAASB
external auditor / Where appropriate the term “external auditor” is used to distinguish the external auditor from an internal auditor / IAASB
fair value / The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. / IAS 2.6, (IAS 16.6), IAS 17.4, IAS 18.7, (IAS 19.7), (IAS 20.3), IAS 21.8, IAS 32.11, (IAS 38.8), IAS 39.9, IFRS 1.A, IFRS 2.A), IFRS 3.A, IFRS 4.A, IFRS 5.A
FIFO (first-in, first-out) / The assumption that the items of inventory that were purchased or produced first are sold first, and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced. / IAS 2.27
finance lease / A lease that transfers substantially all the risks and rewards incident to ownership of an asset. Title may or may not eventually be transferred. / IAS 17.4
financial instrument / Any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity. / IAS 32.11
financial statements / A complete set of financial statements comprises:
(a)balance sheet;
(b)income statement;
(c)a statement showing either:
(i)all changes in equity; or
(ii)changes in equity other than those arising from transactions with equity holders acting in their capacity as equity holders;
(d)a cash flow statement; and
(e)notes, comprising a summary of significant accounting policies and other explanatory notes. / IAS 1.8, (F.7)
first-time adopter / An entity that presents its first IFRS financial statements. / IFRS 1.A
foreign currency / A currency other than the functional currency of the entity. / IAS 21.8
functional currency / The currency of the primary economic environment in which the entity operates. / IAS 21.8
general purpose financial statements / Financial statements prepared in accordance with a financial reporting framework that is designed to meet the common information needs of a wide range of users / IAASB
going concern / The entity is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future. It is assumed that the entity has neither the intention nor the necessity of liquidation or of curtailing materially the scale of its operations. / IAS 1.23-24, F.23
goodwill / Future economic benefits arising from assets that are not capable of being individually identified and separately recognized. / IFRS 3.A
held-to-maturity investment / Non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity (see Appendix A paragraphs AG16-AG25) other than:
(a)those that the entity upon initial recognition designates as at fair value through profit or loss;
(b)those that the entity designates as available for sale; and
(c)those that meet the definition of loans and receivables.
An entity shall not classify any financial assets as held to maturity if the entity has, during the current financial year or during the two preceding financial years, sold or reclassified more than an insignificant amount of held-to-maturity investments before maturity (more than insignificant in relation to the total amount of held-to-maturity investments) other than sales or reclassifications that:
(i)are so close to maturity or the financial asset's call date (for example, less than three months before maturity) that changes in the market rate of interest would not have a significant effect on the financial asset's fair value;
(ii)occur after the entity has collected substantially all of the financial asset's original principal through scheduled payments or prepayments; or
(iii)are attributable to an isolated event that is beyond the entity's control, is non-recurring and could not have been reasonably anticipated by the entity. / IAS 39.9
historical cost / Assets are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition. Liabilities are recorded at the amount of proceeds received in exchange for the obligation, or in some circumstances (for example, income taxes), at the amounts of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business. / F.100(a)
impairment loss / The amount by which the carrying amount of an asset exceeds its recoverable amount. / IAS 16.6, IAS 36.6, IAS 38.8
income / Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants. / F.70(a)
interim financial report / A financial report containing either a complete set of financial statements (as described in IAS 1) or a set of condensed financial statements (as described in IAS 34) for an interim period. / IAS 34.4
internal auditor / A person performing an internal audit / IAASB
International Financial Reporting Standards (IFRSs) / Standards and Interpretations adopted by the International Accounting Standards Board (IASB). They comprise:
(a)International Financial Reporting Standards;
(b)International Accounting Standards; and
(c)Interpretations originated by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC). / IFRS 1.A, IAS 1.11, IAS 8.5
inventories / Assets:
(a)held for sale in the ordinary course of business;
(b)in the process of production for such sale; or
(c)in the form of materials or supplies to be consumed in the production process or in the rendering of services.
Inventories encompass goods purchased and held for resale including, for example, merchandise purchased by a retailer and held for resale, or land and other property held for resale. Inventories also encompass finished goods produced, or work in progress being produced, by the entity and include materials and supplies awaiting use in the production process. In the case of a service provider, inventories include the costs of the service, as described in paragraph 19, for which the entity has not yet recognized the related revenue (see IAS 18Revenue). / IAS 2.6, IAS 2.8
joint venture / A contractual arrangement whereby two or more parties undertake an economic activity which is subject to joint control. / IAS 31.3
lease / An agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. / IAS 17.4
liability / A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. / IAS 37.10, F.49(b
listed entity / An entity whose shares, stock or debt are quoted or listed on a recognized stock exchange, or are marketed under the regulations of a recognized stock exchange or other equivalent body / IAASB
loans and receivables / Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than:
(a)those that the entity intends to sell immediately or in the near term, which shall be classified as held for trading, and those that the entity upon initial recognition designates as at fair value through profit or loss;
(b)those that the entity upon initial recognition designates as available for sale; or
(c)those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration, which shall be classified as available for sale.
An interest acquired in a pool of assets that are not loans or receivables (for example, an interest in a mutual fund or a similar fund) is not a loan or receivable. / IAS 39.9
losses / Decreases in economic benefits and as such they are no different in nature from other expenses. / F.79
modify auditor’s report / An auditor’s report is considered to be modified if either an emphasis of matter paragraph(s) is added to the report or if the opinion than unqualified / IAASB
minority interest / That portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. / IAS 27.4, IFRS 3.A
network firm / An entity under common control, ownership or management with the firm or any entity that a reasonable and informed third party having knowledge of all relevant information would reasonably conclude as being part of the firm nationally or internationally. / IAASB
notes / Notes contain information in addition to that presented in the balance sheet, income statement, statement of changes in equity and cash flow statement. Notes provide narrative descriptions or disaggregations of items disclosed in those statements and information about items that do not qualify for recognition in those statements. / IAS 1.11
opening IFRS balance sheet / An entity’s balance sheet (published or unpublished) at the date of transition to IFRSs. / IFRS 1.A
operating lease / A lease other than a finance lease. / IAS 17.4
ordinary share / An equity instrument that is subordinate to all other classes of equity instruments. / IAS 33.5
originated loans and receivables / See loans and receivables / IAASB
qualified opinion / A qualified opinion is expressed when the auditor concludes that unqualified opinion cannot be expressed but that the effect of any disagreement with management, or limitation on scope is not so material and pervasive as to require an adverse opinion or disclaimer of opinion / IAASB
parent / An entity that has one or more subsidiaries. / IAS 27.4, IFRS 3.A
professional accountants / Those persons, whether in public practice (including a sole practitioner, partnership or corporate body), industry, commerce, the public sector or education, who are members of a member body of the International Federation of Accountants (IFAC) / IAASB
professional accountants in public in practice / Each partner or person occupying a position similar to that of a partner, and each employee in practice providing professional services to a client irrespective of their functional classification (e.g., audit, tax, consulting) and professional accountants in practice having managerial responsibilities. This term is also used to refer to a firm of professional accountants in a public practice / IAASB
profit / The residual amount that remains after expenses (including capital maintenance adjustments, where appropriate) have been deducted from income. Any amount over and above that required to maintain the capital at the beginning of the period is profit. / F.105, F.107
property, plant and equipment / Are tangible items that:
(a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
(b) are expected to be used during more than one period. / IAS 16.6
proportionate consolidation / A method of accounting and reporting whereby a venturer’s share of each of the assets, liabilities, income and expenses of a jointly controlled entity is combined line by line with similar items in the venturer’s financial statements or reported as separate line items in the venturer’s financial statements. / IAS 31.3
related party / A party is related to an entity if:
(a) directly, or indirectly through one or more intermediaries, the party:
(i) controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries);
(ii) has an interest in the entity that gives it significant influence over the entity; or
(iii)has joint control over the entity;
(b) the party is an associate (as defined in IAS 28Investments in Associates) of the entity;
(c) the party is a joint venture in which the entity is a venturer (see IAS 31Interests in Joint Ventures);
(d) the party is a member of the key management personnel of the entity or its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d);
(f) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or
(g) the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity. / IAS 24.9
related party transaction / A transfer of resources, services or obligations between related parties, regardless of whether a price is charged. / IAS 24.9
revenue / The gross inflow of economic benefits during the period arising in the course of the ordinary activities of an entity when those inflows result in increases in equity, other than increases relating to contributions from equity participants. / IAS 18.7
review engagement / The objective of a review engagement is to enable an auditor to state whether, on the basis of procedures which do not provide all the evidence that would be required in an audit, anything has come to the auditor’s attention that causes the auditor to believe that the financial statements are not prepared, in all material respects, in accordance with an applicable financial reporting framework. / IAASB
subsidiary / An entity, including an unincorporated entity such as a partnership that is controlled by another entity (known as the parent). / IFRS 3.A,IAS 27.4, IAS 28.2
taxable profit (tax loss) / The profit (loss) for a period, determined in accordance with the rules established by the taxation authorities, upon which income taxes are payable (recoverable). / IAS 12.5
useful life / The estimated remaining period, from the commencement of the lease term, without limitation by the lease term, over which the economic benefits embodied in the asset are expected to be consumed by the entity. / IAS 17.4
weighted average cost method / Under this method, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. The average may be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances of the entity. / IAS 2.27
working papers / The material prepared by and for, or obtained and retained by, the auditor in connection with the performance of the audit. Working papers may be in the form of data stored on paper, film, electronic media or other media. / IAASB
ACRONYMS AND ABBREVIATIONS