CIMA C02 Fundamentals of Financial Accounting Conceptual and regulatory framework

CIMA C02 Fundamentals of Financial Accounting Conceptual and regulatory framework: Whenever there is a corporate failure such as the collapse of Enron (2001), or problem withany business organisation such as TESCO scandal (2014), both the Accountants and theAccounting profession are under attack by various users and commentators, some of thecriticism are due to inadequate knowledge of how the accounting profession is regulated,leading to users focusing on the symptom rather than the root course of the problem and notbeen able to ask the right questions at the right time.This article focused on the regulatory environments of the accounting profession,understanding of which will help the students and various users of the financial statements torealise that accounting, just like any other discipline, is regulated and what Accountants canand cannot do, is restricted by the regulatory system in place.This article will be also be of help to students preparing for professional exams.According to IAS 1, “financial statements are a structured representation of the financialposition and financial performance of an entity”. The objective of which is to “provideinformation about the financial position, financial performance and the cash flow of an entity”.The financial statement shall provide information on the following components to achieve itsobjective.

CIMA C02 Fundamentals of Financial Accounting Conceptual and regulatory framework

Assets
Liabilities
Equity
Income and expenses

Cash flows: The components are represented in the following financial statements

Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows

Narrative notes to the statementsThe above statements are called financial statements and also known as company’saccounts, and the statements are included in the annual report of an entity

CIMA C02 Fundamentals of Financial Accounting Conceptual and regulatory framework

CIMA C02 Fundamentals of Financial Accounting Conceptual and regulatory framework: The Chartered Institute of Management Accountants (CIMA) is a UK based professional body offering training and qualification in management accountancy and related subjects. It is focused on accountants working in industry, and provides ongoing support and training for members.

CIMA is one of the professional associations for accountants in the UK and Ireland. Its particular emphasis is on developing the management accounting profession. CIMA is the largest management accounting body in the world with more than 227,000 members and students in 179 countries. CIMA is also a member of the International Federation of Accountants.

CIMA operates a standard scheme of qualifying examinations for prospective members. It promotes local education, training and management development operations, and new techniques through its research foundation and the dissemination of management accounting practices through publications and other media related activities. CIMA has been active in recent educational and vocational initiatives in former Eastern bloc countries. It publishes a monthly journal, supplied free to members and registered students, called ‘Financial Management’.

CIMA is recognised as a professional accounting body for various statutory purposes by UK and various overseas governments. The institute regulates the activities of its members by a code of practice, a discipline committee and (a recent innovation) a continuing education scheme. Its governing body is its council, comprising members elected from regional branches. Each of the branches has a committee and is responsible for much of the ‘grass roots’ activity. Activity such as qualification development is undertaken from the London head office.

The CIMA Global Business Challenge, an annual international business and strategic management competition for undergraduates around the world, is designed to bring out the best in the young business leaders of tomorrow.

In July 2009, CIMA added an online community – CIMAsphere – to its website. The community consisted of a range of blogs, discussion boards, groups, community answers, expert Q&A sessions and some social networking features for members, students and the general public. This has since been shut down. Members are instead encouraged to join the CIMA LinkedIn group, and students are directed to CIMAconnect, an online study support portal.

In 2011, CIMA entered into a joint venture with the American Institute of Certified Public Accountants (AICPA) to launch a global management accounting designation called the Chartered Global Management Accountant (CGMA).In the Americas outside the U.S., non-U.S. CPAs can obtain the new designation as an AICPA International Associate, after a rigorous assessment process. In the rest of the world, new designation holders are able to become members of CIMA after the same assessment process.

CIMA is proactive to tie up with American CPA because of the current convergence trend between US-GAAP and IFRS, reinforced following the merger of the iconic New York Stock Exchange with Germany’s Deutsche Boerse AG. “It remains to be seen whether companies listed in a combined exchange would be required to report under IFRS, US GAAP or both, but as the US appears to be moving towards IFRS adoption it is more likely the international standards would be the accounting rules of choice”.