Conceptual Framework  Lec 01 Part 4 - video Dailymotion

HM RANA UMAR FAROOQ  The best teacher of CMA USA

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00:00If a child is born and he is 9 months old,

00:02we will tell him that his performance is less than his previous performance.

00:06So, this is the requirement.

00:08Compare.

00:10If you look at a very good business,

00:12you may have seen two factories down.

00:14So, what should be the information?

00:16It should be comparable.

00:18This is an enhancing product.

00:20If you get this year's data,

00:22you should get the previous year's data.

00:24If you are doing ratio analysis,

00:26you should get the previous year's data.

00:28Next, verifiability.

00:34What is verifiability?

00:36Information should be verifiable.

00:38What?

00:40Verifiable.

00:42If any person claims

00:44that this is what is written in the religion,

00:46then what should we have?

00:48The source should be verifiable.

00:50The person who is claiming.

00:52But we don't have everything.

00:54You must have read the Kalwa.

00:56Most of you must have read the Kalwa.

00:58Those who are non-Muslims, they may not have read it.

01:00It can be in class.

01:02Non-Muslims used to be there.

01:04They used to be in Lahore.

01:06Some non-Muslims are enrolled online.

01:08They are in Sindh.

01:10But, if a person says to you

01:12that show me this.

01:14La ilaha illallah Muhammadur Rasulullah.

01:16Where should I write it?

01:18Does anyone know where to write it?

01:20Did everyone read it?

01:22The Muslims in the mosque,

01:24if they have read it,

01:26where should they write it?

01:28Why are you wearing a pen?

01:30Speak with your mouth.

01:32Come on,

01:34you should have told me the day before yesterday.

01:36You should have told me the day before yesterday.

01:38The Muslims were sitting there.

01:40They told me, La ilaha illallah Muhammadur Rasulullah.

01:42Where should I write it?

01:44Where should I write it?

01:46There is no Quran or Hadith.

01:48Where should I write it?

01:50You can write it in your book.

01:52You can write it in your accounting.

01:54If you write it in your book,

01:56La ilaha illallah Muhammadur Rasulullah.

01:58Where should I write it?

02:00You can write it in your book.

02:02Anyone can write it in such a book.

02:04You can write it anywhere.

02:14I have written it in the Quran.

02:16You have written it in the Quran.

02:18You have written it in the Quran.

02:20La ilaha illallah Muhammadur Rasulullah.

02:22I have written it in the Quran.

02:24You have written it in the Quran.

02:26You read the Quran.

02:28You read the Kalima.

02:30Where is the second Kalima?

02:32I have found it.

02:34You have found the first Kalima.

02:36There are many things,

02:38we don't have the direct source of it.

02:40But sometimes,

02:42we are trying to find it.

02:46We have heard it from our elders.

02:48We have heard it from our father.

02:50Someone has said,

02:52my Kalima ends there.

02:54Someone has said,

02:56my Kalima goes ahead.

02:58He has heard it from his father.

03:00He is not surprised.

03:02He is not surprised.

03:04He listens and acts.

03:06You only read half of the namaz.

03:08You have not written it anywhere.

03:10Bring it for me.

03:12Which namaz?

03:14Where do you read it?

03:16One is the book of Namaz.

03:18The other is the Quran and Hadith.

03:20Find it from the Hadith.

03:22Where is it written?

03:24Bring it from the Hadith.

03:30You are saying wrong things.

03:32Find it.

03:34When it comes to religion,

03:36we are blindly following our parents

03:38and our Ulema.

03:40But we don't spend money there.

03:42We don't spend money there.

03:44Because we will be caught there after death.

03:46We will be caught again.

03:48What was the origin of it?

03:50If you understand it right,

03:52everyone will find it wrong.

03:56That is why,

03:58if you are angry,

04:00you should be unbiased.

04:02You should be very proactive.

04:04Just like you audit.

04:06When you take a sale,

04:08you went into financial trading

04:10and I went into an audit.

04:12And when I give an opinion in an audit,

04:16When I give an opinion in an audit,

04:18what happens if I have an opinion?

04:20Financial statements are giving true and fair view

04:22in accordance with the applicable

04:24financial reporting framework.

04:26When the auditor says that

04:28financial statements are giving true and fair view,

04:30what happens according to the auditor?

04:32What is the information?

04:34Is it free from error?

04:36Is it unbiased?

04:38To what extent does it work?

04:40Auditor cannot check everything.

04:42How will it check the sales

04:44that have been written?

04:46If it is verifiable, it will check.

04:48If there is no source of something,

04:50it is not verifiable.

04:52Whatever information is presented

04:54in a financial statement, it must be verifiable.

04:56Where is the source?

04:58Where is the customer order?

05:00Show the customer order.

05:02Show your quotation.

05:04Then show the customer order.

05:06Then you send the quotation.

05:08Then you send the invoice.

05:10Then the sales are written.

05:12What is this?

05:14Verifiable.

05:20There are two things written here.

05:22One is direct verification

05:24and the other is indirect verification.

05:32OK, brother?

05:34So, if you want to know how much cash you have in your account, you can check it yourself.

05:44Another thing is indirect verification.

05:46For example, in an inventory, let's say there is a balance of 5.5%.

05:51You can calculate the balance, minus the savings and add the purchases.

05:55If you calculate it in your office, what will you get?

05:59Indirect verification.

06:01But, where is the information?

06:04Variable verification.

06:06Whatever information is presented in the financial statement,

06:09there must be some event, some transaction, some evidence,

06:12which can prove that this is an event.

06:14Do you understand?

06:16Okay.

06:17We have read two.

06:18Enhancing characteristics.

06:19Which is the first one?

06:20Second one?

06:22Third information.

06:24Timeliness.

06:28Where is the information?

06:29Timeliness.

06:33ICAP announced that the last date of admission is 8th July.

06:38If you don't have an internet source and you are sitting at home,

06:43studying online, living in a foreign city,

06:45or you live in a hostel and you don't know about this date,

06:49then your friend, if he gives you information before 8th July,

06:53then it is better, I will send the admission.

06:56But, if there is a deadline of 8th July,

06:58and then it cannot be joined,

07:00and then I tell you, then what is the use?

07:04If the last deadline of admission is 8th July,

07:07then when should I tell him?

07:09Before 8th July?

07:11Or after 8th July?

07:13So, if you get some information later,

07:15for my benefit,

07:16if not, then what information should I get?

07:18It should be timely, so that you can make timely decisions.

07:22So, any information about any company,

07:25shareholders, and other stakeholders,

07:27what should they get?

07:28It should be timely.

07:29So, timeliness is very important.

07:31These are the three characteristics.

07:33What are the others?

07:34Compatibility,

07:36Verifiability,

07:38Timeliness.

07:39And the last one is,

07:41Understandability.

07:46I tell you,

07:49the profit of the company is this.

07:56Tell me, how much is it?

07:58How much is it?

07:598000.

08:00How much is this?

08:02What?

08:04What is the profit?

08:08What?

08:09I can understand if you have given.

08:11If you are in a financial statement,

08:13Yes?

08:14Tell me, tell me.

08:16Tell me, son, you are stuck in a bad thing.

08:21This is the thing.

08:22People study in financial statements.

08:24So, whatever you write,

08:25others can also understand.

08:27If anyone has a slight understanding of a business,

08:31then he can read the financial statement and guess,

08:34whether the company is doing well or not.

08:36The information should be understandable.

08:39Technical jargons should not be used.

08:42So, where should the information be?

08:44It should be according to that country.

08:46Like we said,

08:47the language of business is accounting,

08:49but the language of communication is English.

08:52Now, in Pakistan's stock exchange,

08:54the investors are not only Pakistanis.

08:57People from outside the world can also buy shares here

09:00and invest in the company.

09:02So, if you write only in Urdu,

09:04what will the foreign investors think?

09:07So, choose such a language

09:09and use such words.

09:11Do not use technical jargons,

09:13which will make it difficult for people

09:15to understand the financial statement.

09:17Understand it.

09:18So, what should the information be?

09:20It should be understandable.

09:22What will the paper do?

09:24It will pick up three things from here.

09:26It will pick up a fundamental

09:28and tell which of these is not enhancing.

09:30So, the fundamental is not enhancing.

09:32If we remember the language,

09:34I have also studied with you.

09:36I have also said something wrong.

09:38We say that we have two qualitative characteristics.

09:41Which are they?

09:45The brain.

09:47The brain.

09:49Let's focus on this.

09:51We have two fundamental characteristics.

09:53Four of them.

09:55The first fundamental is relevance.

09:57The information is relevant to your decision.

09:59And the second?

10:01Health representation.

10:03Health representation has two ends.

10:05Fair and true means free from error.

10:07And fair means one.

10:09And there are four enhancing characteristics.

10:11The first?

10:13The information should be comparable.

10:15The second?

10:17There should be a source.

10:19In a financial statement,

10:21you write a profit of 10 lakhs.

10:23It should be as verifiable as possible.

10:25That is why people get audits done.

10:27Directors have millions of rupees in their hands.

10:31The auditor may take a few lakhs from us.

10:33It will be very big.

10:35The auditor will take 50 lakhs.

10:37So, why do they get audits done?

10:39So that we know that the information

10:41they have given in the financial statement,

10:43whether the assets are verifiable or not.

10:45That is why the auditor gets audits done.

10:47They get audits done for verifiability.

10:49To verify it.

10:51The information should be verifiable.

10:53And then?

10:55Timeliness information should be there.

10:57Am I right, friends?

10:59Nowadays,

11:01a friend of mine

11:03runs a mobile business.

11:05Just like in the last few days,

11:07there were 15 lakh jobs in cars.

11:09There were two or three,

11:11there was a famous car,

11:13which had a profit of 18 lakhs.

11:15Which one was it?

11:17Yes, Stonic.

11:19One day before,

11:21the one who bought the car,

11:23he lost 18 lakhs.

11:25At midnight, the decision was made.

11:27The one who bought it a day before,

11:29he lost 18 lakhs.

11:31However, dealers know what is going to happen next.

11:33They have inside information.

11:35A friend of mine runs a mobile business.

11:37He keeps getting updates.

11:39His updates are called

11:41Price Alert.

11:43He tells them,

11:45this mobile is going to be cheap,

11:47send it to me.

11:49These people know

11:51the direction of the market.

11:53There are meetings going on in offices.

11:55There are meetings,

11:57there is a director's discussion,

11:59there is a market feedback,

12:01there is a demand for something,

12:03then the price is reduced.

12:05When a person buys a car,

12:07and if he finds out

12:09that the price has gone down,

12:11then what is the use of it?

12:13You should get the information before your decision.

12:15For example,

12:17you do a business.

12:19You need technology to make clothes.

12:21You are looking for a machine.

12:23You know which machine I am looking for.

12:25But you also know that

12:27the best machinery is found in the US and UK.

12:29You can get the latest technology

12:31by investing a few lakhs extra.

12:33When I bought the machinery,

12:35I bought it.

12:37And we do the same.

12:39When we buy something,

12:41we keep it in doubt all the time.

12:43First, there is no relationship.

12:45And when there is a relationship,

12:47we keep putting it in doubt.

12:49His mother is like this,

12:51his father is like this,

12:53he is like this.

12:55I will tell you first

12:57if there is any option.

12:59What can we do with

13:01one objective or three or four numbers?

13:03You should know one or two sentences

13:05about each characteristic.

13:07Next, we have

13:09Measurement Basis

13:11Measurement of

13:13Elements of Finance Statement.

13:19This is written on page number 467.

13:21The rest of the people

13:23are on page number 467.

13:25And this book

13:27is on page number 96.

13:29This paper is missing

13:31from page number 96.

13:33But it can come again.

13:37What was written here?

13:39Measurement of

13:41Elements of

13:43Financial Statement.

13:45This is also called Measurement Basis.

13:47Measurement Basis

13:57See, how many Measurement Basis

13:59are there?

14:01Historical Cost,

14:03Current Cost,

14:05Realizable Value,

14:07and Present Value.

14:09These are the main ones.

14:13Next, we have

14:15Measurement of Equity.

14:19First,

14:21you have

Conceptual Framework Lec 01 Part 4

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