Glosario de la NIC-ESFL

Accounting estimates

Monetary amounts in financial statements that are subject to measurement uncertainty.

Accounting policies

The specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.

Accounting profit

Profit or loss for a period before deducting tax expense.

Accumulating compensated absences

Compensated absences that are carried forward and can be used in future periods if the current period’s entitlement is not used in full.

Acquiree

The business or businesses that the acquirer obtains control of in a business combination.

Acquirer

The entity that obtains control of the acquiree.

Acquiring NPO

The NPO that obtains control of the acquiree.

Active market

A market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

Aggregation

The adding together of assets, liabilities, equity, income or expenses that have shared characteristics and are included in the same classification.

Agricultural activity

The management by an entity of the biological transformation of biological assets for sale, into agricultural produce or into additional biological assets.

Agricultural produce

The harvested product of the entity’s biological assets.

Amortisation

The systematic allocation of the depreciable amount of an asset over its useful life.

Amortised cost of a financial asset or financial liability

The amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability.

Asset

A present economic resource controlled by the entity as a result of past events.

Associate

An entity, including an unincorporated entity such as a partnership, over which the controlling NPO has significant influence and that is neither a controlled entity nor an interest in a joint arrangement.

Bearer plant

A bearer plant is a living plant that:

is used in the production or supply of agricultural produce;
is expected to bear produce for more than one period; and
has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.

Beneficial interest

An interest resulting from the control of another entity that arises other than through equity ownership.

Biological asset

A living animal or plant.

Borrowing costs

Interest and other costs incurred by an entity in connection with the borrowing of funds.

Business

An integrated set of activities and assets that is capable of being conducted and managed for the purpose of:

(a) providing goods or services to customers;
(b) generating investment income (such as dividends or interests); or
(c) generating other income from ordinary activities.

Business combination

A transaction or other event in which an acquirer obtains control of one or more businesses.

Capital grant

An inflow that arises from an EGA of cash or another asset with a specification that the NPO’ acquires or constructs a non-financial asset that will be controlled by the NPO.

Carrying amount

The amount at which an asset, liability or equity is recognised in the Statement of Financial Position.

Cash

Cash on hand and demand deposits.

Cash equivalent

Short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

Cash flows

Inflows and outflows of cash and cash equivalents.

Cash-generating unit

The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

Cash-settled share-based payment transaction

A share-based payment transaction in which the entity acquires goods or services by incurring a liability to transfer cash or other assets to the supplier of those goods or services for amounts that are based on the price (or value) of equity instruments (including shares or share options) of the entity or another group entity.

Class of assets

A grouping of assets of a similar nature and use in an entity’s operations.

Classification

The sorting of assets, liabilities, equity, funds in net assets, income or expenses on the basis of shared characteristics for presentation and disclosure purposes.

Close members of the family of a person

Those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity, including:

(a) that person’s children and spouse or domestic partner;
(b) children of that person’s spouse or domestic partner; and
(c) dependants of that person or that person’s spouse or domestic partner.

Combined financial statements

Financial statements of a reporting entity that comprises two or more entities that are not all linked by a parent–subsidiary (controlling NPO-controlled entity) relationship.

Component of an entity

Operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity.

Compound financial instrument

A financial instrument that, from the issuer’s perspective, contains both a liability and an equity element.

Consolidated financial statements

The financial statements of a controlling NPO and its controlled entities presented as those of a single economic entity.

Construction contract

A contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use.

Constructive obligation

An obligation that derives from an entity’s actions where:

(a) by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities; and
(b) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.

Contingent asset

A possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.

Contingent consideration

Usually, an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met.

Contingent liability

- (a) A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or
- (b) a present obligation that arises from past events but is not recognised because:
  - (i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or
  - (ii) the amount of the obligation cannot be measured with sufficient reliability.

Contract

An agreement between two or more parties that creates enforceable rights and obligations.

Contract asset

An NPO’s right to consideration in exchange for goods or services that the NPO has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the NPO’s future performance).

Contract liability

An NPO’s obligation to transfer goods or services to a customer for which the NPO has received consideration (or the amount is due) from the customer.

Contributions from holders of equity claims

An inflow of resources to an NPO, contributed by parties external to the NPO, which establishes or increases a financial interest in the net assets of the NPO.

Control (of an entity)

A controlling NPO controls an investee (controlled entity) when the controlling NPO is exposed or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Controlled entity

An entity that is controlled by another entity.

Controlling NPO

The NPO that has control of an entity as a result of the application of the principles of control.

Credit loss

The difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive (that is, all cash shortfalls), discounted at the original effective interest rate.

Current tax

The amount of income tax payable (recoverable) in respect of the taxable profit (tax loss) for the current period or past periods.

Customer

A party that has contracted with an NPO to obtain goods or services that are an output of the NPO’s ordinary activities in exchange for consideration.

Date of initial application

The date an entity first applies the first edition of INPAS.

Date of transition to INPAS

The beginning of the earliest period for which an NPO presents full comparative information under INPAS in its first financial statements that comply with INPAS.

Deductible temporary differences

Temporary differences that will result in amounts that are deductible in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled.

Deferred tax

Income tax payable (recoverable) in respect of the taxable profit (tax loss) for future periods as a result of past transactions or events.

Deferred tax assets

The amounts of income tax recoverable in future periods in respect of:

deductible temporary differences;
the carry forward of unused tax losses; and
the carry forward of unused tax credits.

Deferred tax liabilities

The amounts of income tax payable in future periods in respect of taxable temporary differences.

Defined benefit liability

The present value of the defined benefit obligation at the reporting date minus the fair value at the reporting date of plan assets (if any) out of which the obligations are to be settled directly.

Defined benefit obligation

The expected future payments, without deducting any plan assets, required to settle the obligation resulting from employee service in the current and prior periods.

Defined benefit plans

Post-employment benefit plans other than defined contribution plans.

Defined contribution plans

Post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions or to make direct benefit payments to employees if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

Delivery obligation

A grant recipient’s undertaking in a grant agreement to achieve a specified outcome, to carry out a specified activity, to use distinct services, goods or other assets internally for a specified purpose or to transfer distinct services, goods, cash or other assets to a service recipient.

Delivery obligation asset

An NPO’s right to a grant amount for satisfying its delivery obligations in a grant agreement prior to the grantor transferring resources.

Delivery obligation liability

An NPO’s obligation to satisfy its delivery obligation in a grant agreement for which the NPO has received consideration (or the amount is due) from the grantor.

Depreciable amount

The cost of an asset or other amount substituted for cost (in the financial statements) less its residual value.

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life.

Derecognition

The removal of all or part of a recognised asset or liability from an entity’s Statement of Financial Position.

Development

The application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use.

Direct costs

Costs attributable to a single activity that are allocated directly to that activity.

Discontinued operation

A component of an entity that either has been disposed of or is held for sale and:

represents a separate major line of business or geographical area of operations;
is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or
is a controlled entity acquired exclusively with a view to resale.

Distributions to holders of equity claims

An outflow of resources from an NPO, distributed to parties external to the NPO, which returns or reduces a financial interest in the net assets of the NPO. It may also be an inflow of resources to an NPO in return for its financial interest in the net assets of another entity (for example, a dividend received).

Dividends

Distributions of profits to holders of equity instruments in proportion to their holdings of a particular class of capital.

Equity instrument

Any contract that provides a financial interest in an entity – for example, issued shares, bonds and certificates of deposit. These instruments can be traded or exchanged.

Economic resource

A right that has the potential to produce economic benefits or service potential.

Effective interest method

A method of calculating the amortised cost of a financial asset or a financial liability (or a group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period.

Effective interest rate

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.

Effectiveness of a hedge

The degree to which changes in the fair value or cash flows of the hedged item that are attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument.

Employee benefits

All forms of consideration given by an entity in exchange for service rendered by employees.

Enhancing qualitative characteristic

A qualitative characteristic that makes useful information more useful. The enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability.

Equity

The residual interest in the assets of an entity other than an NPO after deducting all its liabilities.

Equity claim

A financial interest in the net assets of an NPO that is due to holders of those claims.

Errors

Omissions from and misstatements in the entity’s financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:

was available when financial statements for those periods were authorised for issue; and
could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements.

Executory contract

A contract or a portion of a contract that is equally unperformed – neither party has fulfilled any of its obligations, or both parties have partially fulfilled their obligations to an equal extent.

Existence uncertainty

Uncertainty about whether an asset or liability exists.

Expenses

Decreases in assets or increases in liabilities that result in decreases in net assets, other than those relating to distributions to holders of equity claims.

Fair presentation

Faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses.

Fair value

The price that would be received to sell, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

Finance lease

A lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or may not eventually be transferred. A lease that is not a finance lease is an operating lease.

Financial asset

Any asset that is:

cash;
an equity instrument of another entity;
a contractual right:
- to receive cash or another financial asset from another entity; or
- to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; or
a contract that will or may be settled in the entity’s own equity instruments and:
- under which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments; or
- (ii) that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments. For this purpose, the entity’s own equity instruments do not include instruments that are themselves contracts for the future receipt or delivery of the entity’s own equity instruments.

Financial guarantee contract

A contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial instrument

A contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial liability

Any liability that is a contractual obligation:

to deliver cash or another financial asset to another entity; or
to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity.

Financial position

The relationship of the assets, liabilities and net assets of an entity as reported in the Statement of Financial Position.

Financial statements

Structured representation of the financial position, income and expenses and cash flows of an entity.

Financing activities

Activities that result in changes in the size and composition of the equity instruments and borrowings of the entity.

Firm commitment

A binding agreement for the exchange of a specified quantity of resources at a specified price on a specified future date or dates.

First-time adopter of INPAS

An entity that presents its first annual financial statements that conform to INPAS, regardless of whether its previous accounting framework was full IFRS Accounting Standards or another set of accounting standards.

Forecast transaction

An uncommitted but anticipated future transaction.

Foreign operation

An entity that is a controlled entity, associate, joint arrangement or branch of a reporting NPO, the activities of which are based or conducted in a country or currency other than those of the reporting entity.

Fulfilment right

A fulfilment right is a grantor’s enforceable right to have the grant recipient satisfy its delivery obligation in a manner specified in the grant agreement, or be required to address the consequences specified in the agreement.

Full IFRS Accounting Standards

Standards and Interpretations issued by the International Accounting Standards Board (IASB), comprising:

International Financial Reporting Standards;
International Accounting Standards;
IFRIC Interpretations; and
SIC Interpretations.

Functional currency

The currency of the primary economic environment in which the entity operates.

Functional currency normalisation date

The date when an entity’s functional currency no longer has either, or both, of the two characteristics of severe hyperinflation, or when there is a change in the entity’s functional currency to a currency that is not subject to severe hyperinflation.

Fund

A fund consists of the net resources held by the NPO that are required to be separately tracked because:

there is a requirement arising from legal or equivalent means to separately track resources and the use of those resources; or
there are reasonable expectations by an individual stakeholder or a group of stakeholders (internal or external) that an NPO will track resources used for a specific set of activities.

Fundamental qualitative characteristic

A qualitative characteristic that financial information must possess to be useful to the primary users of general purpose financial reports. The fundamental qualitative characteristics are relevance and faithful representation.

Funding (of post-employment benefits)

Contributions by an entity, and sometimes its employees, into an entity or fund that is legally separate from the reporting entity and from which the employee benefits are paid.

General purpose financial reports

Financial reports that present management commentary and other narrative reporting alongside the financial information contained in the general purpose financial statements and that are directed to the general financial information needs of a wide range of users who are not in a position to demand reports tailored to meet their particular information needs.

General purpose financial statements

Financial statements directed to the general financial information needs of a wide range of users who are not in a position to demand reports tailored to meet their particular information needs.

Going concern

An entity is a going concern unless management either intends to liquidate the entity, cease operations, or has no realistic alternative but to do so.

Goodwill

An asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised.

Government

Government, government agencies and similar bodies whether local, national or international.

Government grants

Assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to the operating activities of the entity.

Grant

Resources provider by a grantor to a grant recipient (which may be an entity or individual) by transferring cash or a service, good or other asset to that grant recipient without directly receiving any cash, service, good or other asset in return.

Grant expense

A grant expense is an expense arising from a transaction in which a grant-providing NPO provides, or is obliged to provide, resources to a grant recipient (which may be an entity or individual) by transferring cash or a service, good or other asset to that grant recipient without directly receiving any cash, service, good or other asset in return.

Grant recipient

An NPO or another entity in receipt of resources from another NPO or entity.

Grantor

An NPO, organisation or individual that provides a resource to another NPO or entity.

Gross investment in a lease

The aggregate of:

the minimum lease payments receivable by the lessor under a finance lease; and
any unguaranteed residual value accruing to the lessor.

Group

A parent (controlling NPO) and all its controlled entities.

Hedged item

For the purpose of special hedge accounting by NPOs under F1 Part II of this Standard, a hedged item is:

- interest rate risk of a debt instrument measured at amortised cost;
- foreign exchange or interest rate risk in a firm commitment or a highly probable forecast transaction;
- price risk of a commodity that it holds or in a firm commitment or highly probable forecast transaction to purchase or sell a commodity; or
- foreign exchange risk in a net investment in a foreign operation.

Hedging instrument

For the purpose of special hedge accounting by NPOs under F1 Part II of this Standard, a hedging instrument is a financial instrument that meets all of the following terms and conditions:

- it is an interest rate swap, a foreign currency swap, a foreign currency forward exchange contract or a commodity forward exchange contract that is expected to be highly effective in offsetting a risk identified in paragraph F1.65 that is designated as the hedged risk;
- it involves a party external to the reporting entity (ie external to the group, segment or individual entity being reported on);
- its notional amount is equal to the designated amount of the principal or notional amount of the hedged item;
- it has a specified maturity date not later than:
  - the maturity of the financial instrument being hedged;
  - the expected settlement of the commodity purchase or sale commitment; or
  - the occurrence of the highly probable forecast foreign currency or commodity transaction being hedged;
- it has no prepayment, early termination or extension features.

Highest and best use

The use of a non‑financial asset by market participants that would maximise the value of the asset or the group of assets and liabilities (for example, a business) within which the asset would be used.

Highly probable

Significantly more likely than probable.

IFRS for SMEs Accounting Standard

The accounting standard issued by the International Accounting Standards Board for entities that do not have public accountability.

Impairment (loss)

The amount by which the carrying amount of an asset exceeds:

in the case of inventories, its selling price less costs to complete and sell; or
in the case of other non-financial assets, its recoverable amount.

Impracticable

Applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort to do so.

Income

Increases in assets, or decreases in liabilities, that result in increases in net assets, other than those relating to contributions from holders of equity claims.

Income statement

A financial statement that presents all items of income and expense recognised in a reporting period, excluding the items of other comprehensive income.

Income tax

All domestic and foreign taxes that are based on taxable profits. Income tax also includes taxes, such as withholding taxes, that are payable by a controlled entity, associate or joint arrangement on distributions to the reporting entity.

Ineligible cost

Expenses that have been incurred that are specifically excluded from being claimed under a grant or other funding agreement.

Insurance contract

A contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.

Intangible asset

An identifiable non-monetary asset without physical substance. Such an asset is identifiable when it:

is separable – that is, it is capable of being separated – or divided from the entity and sold, transferred, licenced, rented or exchanged, either individually or together with a related contract, asset or liability; or
arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

Interest rate implicit in the lease

The discount rate that, at the inception of the lease, causes the aggregate present value of (a) the minimum lease payments and (b) the unguaranteed residual value to be equal to the sum of (i) the fair value of the leased asset and (ii) any initial direct costs of the lessor.

Interim financial report

A financial report containing either a complete set of financial statements or a set of condensed financial statements for an interim period.

Interim period

A financial reporting period shorter than a full financial year.

International Public Sector Accounting Standards (IPSAS)

Standards issued by the International Public Sector Accounting Standards Board (IPSASB) for use by public sector entities other than government business enterprises.

Inventories

Assets:

held for sale in the ordinary course of operations;
held for distribution to service recipients in the ordinary course of operations;
held for use as prizes for fundraising events (or similar circumstances) where the items will be transferred to another party in the course of the NPO’s fundraising activities;
in the process of production for such sale; or
in the form of materials or supplies to be consumed in the production process or in the rendering of services.

Investing activities

The acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Investment property

Property (land or a building, part of a building, or both) held by the owner or by the lessee under a finance lease to earn rentals or for capital appreciation or both, instead of for:

use in the production or supply of goods or services or for administrative purposes; or
sale in the ordinary course of business.

Joint arrangement

An arrangement in which two or more parties have joint control. Joint arrangements can take the form of jointly controlled operations, jointly controlled assets or jointly controlled entities.

Joint control

The contractually agreed sharing of control of an arrangement. It exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Jointly controlled entity

A joint arrangement that involves the establishment of a corporation, partnership or other entity in which each party has an interest. The entity operates in the same way as other entities, except that an arrangement between the parties establishes joint control.

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.

Legitimate cost

Costs properly (lawfully) and reasonably incurred in connection with a project or a fund.

Lessee’s incremental borrowing rate of interest

The rate of interest the lessee would have to pay on a similar lease or, if that is not determinable, the rate that, at the inception of the lease, the lessee would incur to borrow over a similar term, and with a similar security, the funds necessary to purchase the asset.

Liability

A present obligation of the entity to transfer an economic resource as a result of past events.

Loans payable

Financial liabilities other than short-term trade payables on normal credit terms.

Market participants

Buyers and sellers in the principal (or most advantageous) market for the asset or liability that have all of the following characteristics:

- they are independent of each other – that is, they are not related parties as defined in H1;
- they are knowledgeable, having a reasonable understanding about the asset or liability and the transaction using all available information;
- they are able to enter into a transaction for the asset or liability; and
- they are willing to enter into a transaction for the asset or liability – that is, they are motivated but not forced or otherwise compelled to do so.

Material

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

Measure

The result of applying a measurement basis to an asset or liability and related income and expenses.

Measurement basis

An identified feature – for example, historical cost, fair value or fulfilment value – of an item being measured.

Measurement uncertainty

Uncertainty that arises when monetary amounts in financial reports cannot be observed directly and must instead be estimated.

Minimum lease payments

The payments over the lease term that the lessee is or can be required to make, excluding contingent rent, costs for services and taxes to be paid by and reimbursed to the lessor, together with:

for a lessee, any amounts guaranteed by the lessee or by a party related to the lessee; or
for a lessor, any residual value guaranteed to the lessor by:
- the lessee;
- a party related to the lessee; or
- a third party unrelated to the lessor that is financially capable of discharging the obligations under the guarantee.

However, if the lessee has an option to purchase the asset at a price that is expected to be sufficiently lower than fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised, the minimum lease payments comprise the minimum payments payable over the lease term to the expected date of exercise of this purchase option and the payment required to exercise it.

Monetary items

Units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency.

Most advantageous market

The market that maximises the amount that would be received to sell the asset or minimises the amount that would be paid to transfer the liability, after taking into account transaction costs and transport costs.

Multi-employer (benefit) plans

Defined contribution plans (other than state plans) or defined benefit plans (other than state plans) that:

pool the assets contributed by various entities that are not under common control; and
use those assets to provide benefits to employees of more than one entity, on the basis that contribution and benefit levels are determined without regard to the identity of the entity that employs the employees concerned.

Net investment in a lease

The gross investment in a lease discounted at the interest rate implicit in the lease.

Non-controlling interest

The equity in a controlled entity not attributable, directly or indirectly, to a controlling NPO.

Notes (to financial statements)

Notes contain information in addition to that presented in the Statement of Financial Position, Statement of Income and Expenses, Statement of Changes in Net Assets and Statement of Cash Flows. Notes provide narrative descriptions or disaggregations of items presented in those statements and information about items that do not qualify for recognition in those statements.

Notional amount

The quantity of currency units, shares, bushels, pounds or other units specified in a financial instrument contract.

Objective of financial statements

To provide information about the financial position, income and expenses and cash flows of an entity that is useful for decision-making by a broad range of users who are not in a position to demand reports tailored to meet their particular information needs.

Observable inputs

Inputs that are developed using market data, such as publicly available information about actual events or transactions, and that reflect the assumptions that market participants would use when pricing the asset or liability.

Offsetting

Grouping an asset and liability that are recognised and measured as separate units of account into a single net amount in the Statement of Financial Position.

Onerous contract

A contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

Operating activities

The principal activities of the entity that are not investing or financing activities.

Operating lease

A lease that does not transfer substantially all the risks and rewards incidental to ownership. A lease that is not an operating lease is a finance lease.

Operating unit

The smallest identifiable group of assets that are operated largely independently from other assets or groups of assets

Orderly transaction

A transaction that assumes exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction (for example, a forced liquidation or distress sale).

Other comprehensive income

Items of income and expense (including reclassification adjustments) that are not recognised in profit or loss as required or permitted by the IFRS for SMEs Accounting Standard.

Other financial reporting

Other financial reporting assists in the interpretation of a complete set of financial statements or improves users’ ability to make decisions. This is information that is additional to the financial statements.

Outcome uncertainty

Uncertainty about the amount or timing of any inflow or outflow of economic benefits that will result from an asset or liability.

Owners

Holders of instruments classified as equity in a for-profit entity.

Parent

An entity that has one or more subsidiaries or controlled entities. The term ‘controlling NPO’ is used where an NPO is a parent.

Plan assets (of an employee benefit plan)

Assets held by a long-term employee benefit fund and qualifying insurance policies.

Post-employment benefit plans

Formal or informal arrangements under which an entity provides post-employment benefits for one or more employees.

Post-employment benefits

Employee benefits (other than termination benefits) that are payable after the completion of employment.

Potential to produce economic benefits

Within an economic resource, a right that already exists and that, in at least one circumstance, would produce for the entity economic benefits or service potential beyond those available to all other parties.

Present value

A current estimate of the present discounted value of the future net cash flows in the normal course of operations.

Presentation currency

The currency in which the financial statements are presented.

Primary users

Existing and potential investors, lenders and other creditors.

Principal market

The market with the greatest volume and level of activity for the asset or liability.

Probable

More likely than not.

Profit or loss

The total of income less expenses, excluding the components of other comprehensive income of for-profit entities.

Projected unit credit method

An actuarial valuation method that sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation (sometimes known as the accrued benefit method pro-rated on service or as the benefit/years of service method).

Promise (in a contract with a customer)

An obligation to transfer a good or service (or bundle of goods or services) that is distinct.

Property, plant and equipment

Tangible assets that:

are held for use in the production or supply of goods or services, for rental to others or for administrative purposes; and
are expected to be used during more than one period.

Prospective application (of a change in accounting policy)

Applying the new accounting policy to transactions, other events and conditions occurring after the date as at which the policy is changed.

Provision

A liability of uncertain timing or amount.

Prudence

The exercise of caution when making judgements under conditions of uncertainty. The exercise of prudence means that assets and income are not overstated and liabilities and expenses are not understated. Equally, the exercise of prudence does not allow for the understatement of assets or income or the overstatement of liabilities or expenses.

Public accountability

An entity has public accountability if:

its debt or equity instruments are traded in a public market, or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or
it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (for example, banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks often meet this second criterion).

Publicly traded (debt or equity instruments)

Traded, or in the process of being issued for trading, in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets).

Recognition

The process of capturing for inclusion in the Statement of Financial Position or the statement(s) of financial performance an item that meets the definition of one of the elements of financial statements – an asset, a liability, equity, income or expenses. Recognition involves depicting the item in one of those statements – either alone or in aggregation with other items – in words and by a monetary amount and including that amount in one or more totals in that statement.

Recoverable amount

The higher of an asset’s (or cash-generating unit’s) fair value less costs to sell and its value in use.

Related party

A related party is a person or entity that is related to the entity that is preparing its financial statements (the reporting entity):

a person or a close member of that person’s family is related to a reporting entity if that person:
- is a member of the key management personnel of the reporting entity or of a parent of the reporting entity;
- has control or joint control over the reporting entity; or
- has significant influence over the reporting entity.
an entity is related to a reporting entity if any of the following conditions apply:
- the entity and the reporting entity are members of the same group (which means that each controlling NPO, controlled entity and fellow controlled entity is related to the others);
- one entity is an associate or jointly controlled entity of the other entity (or an associate or jointly controlled entity of a member of a group of which the other entity is a member);
- both entities are jointly controlled entities of the same third entity;
- one entity is a jointly controlled entity of a third entity, and the other entity is an associate of the third entity;
- the entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity;
- the entity is controlled or jointly controlled by a person identified in (a);
- the entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity;
- a person identified in (a)(ii) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

Related party transaction

A transfer of resources, services or obligations between related parties, regardless of whether a price is charged.

Relevance

Relevant financial information is capable of making a difference in the decisions made by users.

Relevant activities (of an investee)

The activities that significantly affect the investee’s returns.

Reliability

The quality of information that makes it free from material error and bias and represents faithfully that which it either purports to represent or could reasonably be expected to represent.

Reporting date

The end of the latest period covered by the financial report or by an interim financial report.

Reporting entity

An entity that is required, or chooses, to prepare general purpose financial reports.

Reporting NPO

A reporting NPO is a single NPO, part of an NPO or a combination of entities that is required or chooses to prepare general purpose financial reports. Where more than one entity is a part of a reporting NPO, this may include all non-profit organisations or a combination of for-profit and non-profit organisations.

Reporting Period

A bearer plant is a living plant that: is used in the production or supply of agricultural produce; is expected to bear produce for more than one period; and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.

Research

Original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.

Reserve

An amount set aside as a result of applying the requirements of INPAS – for example, revaluation reserve.

Residual value (of an asset)

The estimated amount that an entity would currently obtain from disposal of an asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

Restricted funds

Funds that are required to be expended, invested or retained by the NPO for a specific purpose or activity as a consequence of externally imposed funding or other legal arrangements placed on the NPO by a resource provider.

Retrospective application (of a change in accounting policy)

Applying a new accounting policy to transactions, other events and conditions as if that policy had always been applied.

Revenue

Income arising in the course of an NPO’s ordinary activities.

Separate financial statements

Those presented by an entity in which the entity could elect, in accordance with paragraphs G9.25–G9.26, to account for its investments in controlled entities, jointly controlled entities and associates, either at cost less impairment, at fair value with changes in fair value recognised in profit or loss or using the equity method following the procedures in paragraph G14.8.

Service beneficiary, service recipient

Individual, group of individuals or entity that benefit or are in receipt of services, goods or advocacy of an NPO.

Service concession arrangement

An arrangement whereby a government or other public sector body contracts with a private operator to develop (or upgrade), operate and maintain the grantor’s infrastructure assets such as roads, bridges, tunnels, airports, energy distribution networks, prisons or hospitals.

Service potential

The capacity to provide services that contribute to achieving the NPO’s objectives. Service potential enables an entity to achieve its objectives without necessarily generating net cash inflows.

Severe hyperinflation

The currency of a hyperinflationary economy is subject to severe hyperinflation if it has both of the following characteristics:

a reliable general price index is not available to all entities with transactions and balances in the currency; and
exchangeability between the currency and a relatively stable foreign currency does not exist.

Shared costs

Costs that contribute directly to more than one activity that are allocated between those activities.

Small and medium-sized entities

Entities that:

do not have public accountability; and
publish general purpose financial statements for external users.

An entity has public accountability if:

it files or is in the process of filing its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market; or
it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses.

Social use assets

Assets that are held for delivering benefits to society or a section of society rather than to maximise cash inflows.

Societal accountability

An expansive view of accountability that recognises a general accountability to society at large due to the importance of NPO goods and services, the funding environment, the preferential treatment that an NPO can receive compared to other organisations, and the need to ensure the effective operation of the wider sector.

Stand-alone value (of a good or service)

The price of a good or service that is used internally or provided separately to a service recipient.

State (employee benefit) plan

Employee benefit plans established by legislation to cover all entities (or all entities in a particular category – for example, a specific industry) and operated by national or local government or by another body (for example, an autonomous agency created specifically for this purpose) which is not subject to control or influence by the reporting entity.

Statement of Cash Flows

A financial statement that provides information about the changes in cash and cash equivalents of an entity for a period, showing separately changes during the period from operating, investing and financing activities.

Statement of Changes in Net Assets

A financial statement that presents the surplus or deficit for a period, items of income and expense not recognised directly in Statement of Income and Expenses for the period, the effects of changes in accounting policy and corrections of errors recognised in the period, the amounts of changes in equity and movements between funds.

Statement of Financial Position

A financial statement that presents the relationship of an entity’s assets, liabilities and interests of holders of equity claims as of a specific date (also called the balance sheet).

Statement of Income and Expenses

A financial statement that presents all items of income and expense recognised in the period, except for items of income and expense explicitly required to be recognised in the Statement of Changes in Net Assets and totals to the surplus or loss for a period.

Subsidiary

An entity that is controlled by another entity.

Support costs

Costs that are not specific to an activity and are likely to be organisation wide. These costs may be apportioned between the activities being supported.

Surplus or deficit

The difference between items of income and expenses in the reporting period that does not include those items to be shown in the Statement of Changes in Net Assets.

Surplus or deficit from operating activities

The difference between items of income and expenses in the reporting period that do not include those items to be shown separately on the Statement of Income and Expenses or in the Statement of Changes in Net Assets.

Tax base

The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes.

Tax expense

The aggregate amount included in total comprehensive income or equity for the reporting period in respect of current tax and deferred tax.

Taxable profit (tax loss)

The profit (loss) for a reporting period upon which income taxes are payable or recoverable, determined in accordance with the rules established by the taxation authorities. Taxable profit equals taxable income less amounts deductible from taxable income.

Taxable temporary differences

Temporary differences that will result in taxable amounts in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled.

Temporary differences

Differences between the carrying amount of an asset or liability in the Statement of Financial Position and its tax base.

Termination benefits

Employee benefits payable at the earlier of the following dates:

when an entity can no longer withdraw the offer of those benefits; and
when the entity recognises costs for a restructuring that is within the scope of D5 and involves the payment of termination benefits.

Timeliness

Having information available to decision-makers in time to be capable of influencing their decisions.

Timing differences

Income or expenses that are recognised in surplus or deficit in one period but under tax laws or regulations are included in taxable income in a different period.

Total comprehensive income

The change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners (equal to the sum of profit or loss and other comprehensive income), as defined by the IFRS for SMEs Accounting Standard.

Transaction consideration

The amount of resources to which an NPO expects to be entitled.

Transaction costs

The costs to sell an asset or transfer a liability in the principal (or most advantageous) market for the asset or liability that are directly attributable to the disposal of the asset or the transfer of the liability and meet both of the following criteria:

they result directly from and are essential to that transaction; and
they would not have been incurred by the entity had the decision to sell the asset or transfer the liability not been made.

Understandability

Classifying, characterising and presenting information clearly and concisely makes it understandable.

Unit of account

The right or the group of rights, the obligation or the group of obligations, or the group of rights and obligations, to which recognition criteria and measurement concepts are applied.

Unobservable inputs

Inputs for which market data are not available and that are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability.

Unrestricted funds

Funds that are freely available to be used by an NPO for any of its purposes or activities. An NPO is free to internally designate funds for a specific purpose or activity (including designation by the NPO’s governing body), but the absence of any externally imposed funding or other legal arrangement means that this designation can be changed and therefore designated funds are unrestricted funds.

Useful life

The period over which an asset is expected to be available for use by an entity or the number of production or similar units expected to be obtained from the asset by an entity.

Value in use

The present value of the future cash flows or service potential expected to be derived from an asset or cash-generating unit.

Vested benefits

Benefits, the rights to which under the conditions of a retirement benefit plan are not conditional on continued employment.