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CA Final · Financial Reporting · Financial Instruments: Disclosures

A finance manager at Kaveri Industries Ltd is preparing the risk note. She wants to show the credit risk exposure numbers in one table and put the explanation of how the company manages credit risk in a separate, unlinked section at the back of the annual report. Based on para 32A, what is the best view?

Presenting the narrative far from the numbers is not ideal. Para 32A says qualitative disclosures should be given in the context of quantitative disclosures so users can link related information and form an overall picture of risk. Their interaction better enables users to evaluate the entity's risk exposure.

  1. AAcceptable, because qualitative and quantitative information are independent of each other
  2. BNot ideal, because para 32A emphasises that qualitative disclosures given in the context of quantitative disclosures let users link related disclosuresCorrect
  3. CAcceptable only if the quantitative table is audited
  4. DNot ideal, because qualitative disclosures must be omitted when numbers are given

Explanation

Para 32A stresses that providing qualitative disclosures in the context of quantitative disclosures lets users link related disclosures and see an overall picture. Separating them without linkage defeats this purpose. Omitting the narrative is not what the paragraph says.

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