Financial Statements For the year ended
Significant accounting policies (continued)
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| 2 Significant accounting policies (continued) (c) Critical accounting estimates and judgements (continued) i) Pension and other post-employment benefits (continued) Management have considered the extent to which a pension asset should be recognised under IAS 19 and IFRIC 14 which require an entity to limit the measurement of a net defined benefit asset to the lower of the surplus in the defined benefit scheme and the asset ceiling, defined to be the present value of economic benefits available in the form of refunds from the scheme or reductions to future contributions. Under IFRIC 14, a refund is available to an entity if the entity has an unconditional right to a refund. Management have taken advice to understand the circumstances under which any surplus assets might not be refunded to ACCA and have made the judgement that the possible circumstances under which any scheme surplus might not be refunded to ACCA, such as windup of the scheme, augmentation of benefits, amendment to scheme rules, are within the control of ACCA. Therefore it is considered that ACCA has an unconditional right to a refund assuming the gradual settlement of scheme liabilities overtime until all members have left the scheme and as such, it is appropriate to recognise the full surplus as a pension asset in the statement of financial position. ii) Taxation ACCA is required to estimate the income tax in each of the jurisdictions in which it operates. This requires an estimation of the current tax liability together with an assessment of the temporary differences which arise as a consequence of different accounting and tax treatments. These temporary differences result in deferred tax assets or liabilities which are included in the balance sheet. Deferred tax assets and liabilities are measured using tax rates substantially enacted by balance sheet date expected to apply when the temporary differences reverse. ACCA operates in many countries in the world and is subject to many tax laws and regulations. Where the precise impact of these laws and regulations is unclear then reasonable estimates maybe used to determine the tax charge included in the financial statements. Estimates may also be used in relation to any indirect international sales taxes which are payable. If the tax eventually payable or reclaimable differs from the amounts originally estimated, then the difference will be charged or credited in the financial statements of the year in which it crystallises. iii) Revenue recognition ACCA’s main income is derived from subscriptions and examination fees. As ACCA’s subscription year is not coterminous with the financial year, ACCA has processes in place to ensure that the recognition of those income streams is in the correct period. In addition, there are processes in place to ensure that exam fee income received in advance of providing the exam is deferred into the relevant period, and that subscription income for the year is recognised as appropriate. An adjustment to income is made each year which reflects the anticipated value of the expected credit loss which has been invoiced in relation to services being provided. iv) Impairment of non-financial assets ACCA assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Internally generated intangible assets are tested for impairment annually and at other times when such indicators exist. The recoverable amounts have been determined based on value-in-use calculations, which requires management to estimate future cash flows. The use of this method requires judgement around whether an impairment review is triggered, the selection of a suitable discount rate in order to calculate the present value of future cash flows, and assumptions related to the expected number of future members sitting exams. Other non-financial assets such as third-party intangible assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. Association of Chartered Certified Accountants Notes to the Financial Statements for the year ended 31 March 2022 Download 0.68 Mb. Share with your friends:
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