Accounting glossary
Every term in one place: what it means, a worked example, the common mistake, and where each exam wants it.
3
A
- ACCA Code of Ethics and ConductThe ACCA Code of Ethics and Conduct sets ethical requirements and guidance for those within its scope.
- ALARPALARP means reducing risk as low as reasonably practicable.
- Abnormal gainAn abnormal gain occurs when actual process loss is less than the normal allowance, so actual good output exceeds expected good output.
- Abnormal lossAbnormal loss is actual process loss exceeding the normal allowance for the relevant input.
- Absorption and marginal profit reconciliationAbsorption and marginal profits differ because fixed production overhead is carried in inventory under absorption costing but expensed in the period under marginal costing.
- Absorption baseAn absorption base is the activity measure used to charge overhead to output, such as direct labour hours, machine hours or units.
- Absorption costingAbsorption costing includes direct production costs and both variable and fixed production overhead in product cost.
- Acceptability (strategy)Strategic acceptability assesses whether an option’s expected outcomes, risks and implications are acceptable to relevant stakeholders.
- Acceptable level of ethical threatAn acceptable level is a level at which a reasonable and informed third party would likely conclude that the accountant complies with the fundamental ethical principles.
- Acceptance in English contract lawAcceptance is an unqualified agreement to an offer on its terms, effective under the applicable communication rules.
- Acceptance under the CISGAn offeree’s indication of assent to an offer becomes effective when it reaches the offeror, subject to the Convention’s exceptions.
- Accommodative CSR strategyAn accommodative CSR strategy responds to stakeholder and public concerns by adjusting organisational behaviour and accepting relevant responsibilities.
- AccountabilityAccountability is the obligation to explain and answer for decisions, actions and use of resources to those with a legitimate interest.
- Accountant in public practiceAn accountant in public practice provides professional services through a practice serving clients.
- Accounting equationThe accounting equation states that assets equal liabilities plus equity.
- Accounting estimateAn accounting estimate is a monetary amount subject to measurement uncertainty.
- Accounting policyAn accounting policy is a principle, basis, convention, rule or practice used when preparing financial statements.
- Accounting rate of returnAverage annual accounting profit from an investment expressed as a percentage of the specified investment base.
- Accounting recordsAccounting records are the documents, transaction data and account balances from which financial statements are prepared.
- AccrualsAn accrued expense is an expense incurred in the reporting period but not yet paid by the reporting date.
- Accruals basisThe accruals basis records the effects of transactions when they occur, rather than only when cash moves.
- Accrued incomeAccrued income is income earned by the reporting date that has not yet been received or recorded as receivable.
- Accrued income scheme for gilts (UK)Rules that can tax accrued interest when an interest-bearing security is transferred.
- Accumulated depreciationAccumulated depreciation is the total depreciation charged on an asset to date, subject to adjustments such as disposal or revaluation.
- Accuracy assertionAccuracy concerns whether amounts and other data relating to recorded transactions and events have been recorded appropriately.
- AcquisitionA transaction in which a buyer obtains control of a business or relevant assets under agreed or contested terms.
- Acquisition considerationThe cash, securities or other value offered or transferred by a buyer to acquire a business or target interest.
- Acquisition dateThe acquisition date is the date on which the acquirer obtains control of the subsidiary.
- Acquisition defenceAn action taken by a target company or its stakeholders in response to a proposed acquisition, subject to applicable rules.
- Acquisition of a subsidiary in the cash flow statementCash flows from obtaining control of a subsidiary are presented separately as investing activities in the consolidated statement of cash flows.
- Acquisition premiumThe excess of an offered acquisition price over a stated stand-alone or pre-bid value of the target.
- Acquisition synergyThe additional value created when combining businesses generates benefits beyond their separate stand-alone values, net of relevant costs.
- Acquisition-related costs in a business combinationAcquisition-related costs are costs incurred to effect a business combination, such as advisory, legal and due-diligence fees.
- Act of ParliamentAn Act of Parliament is legislation enacted through the relevant parliamentary process.
- Action-centred leadershipAdair’s action-centred leadership model focuses on three overlapping responsibilities: achieving the task, maintaining the team and supporting individual needs.
- Active marketAn active market is a market in which transactions for an asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
- Active stakeholderAn active stakeholder takes steps to influence an organisation or participate in matters affecting its interests.
- Activity-based budgetingActivity-based budgeting estimates the activities needed to deliver planned output and then the resources those activities require.
- Activity-based costingActivity-based costing assigns overhead to activity cost pools and then to products, services or customers using drivers reflecting their consumption of those activities.
- Activity-based managementActivity-based management uses activity cost and performance information to improve processes, customer or product economics and resource use.
- Actual authority (English agency law)Authority conferred by a principal on an agent to act on the principal’s behalf.
- Actuarial assumptionsActuarial assumptions are inputs used to estimate uncertain future outcomes, such as mortality, employee turnover, inflation, salary growth and discount rates.
- Ad hoc committeeAn ad hoc committee is created for a particular task or issue and normally ends when its remit is completed.
- Adaptive leadershipAdaptive leadership mobilises people to work on challenges requiring learning or changes in established assumptions, relationships or behaviour.
- Additive time series modelAn additive time series model combines components by addition, such as trend plus a seasonal adjustment.
- Adjourning (team development)Adjourning is the stage added to Tuckman’s model for the ending or separation of a team.
- Adjusted net income (UK)Adjusted net income is a measure of taxable income after specified relief adjustments, used in certain UK tax calculations.
- Adjusted paybackA payback requirement made more demanding to reflect greater risk or uncertainty, commonly by shortening the permitted recovery period.
- Adjusted present valueAn investment valuation that adds the value of financing effects to the project's value as if financed entirely by equity.
- Adjusting eventAn adjusting event after the reporting period provides further evidence about a condition that already existed at the reporting date.
- Administration (business function)Administration as a business function supports coordination and orderly working through activities such as documentation, records, communication, scheduling and shared services.
- Administration overheadAdministration overhead comprises indirect costs of general management and administration that are not properly assigned to production, selling or another distinct function.
- Admission of a new partnerAdmission of a new partner changes the partnership’s ownership arrangements.
- Adverse opinionAn adverse opinion is expressed when the auditor has obtained sufficient appropriate evidence and concludes that misstatements are both material and pervasive to the financial statements.
- Advocacy threatAn advocacy threat arises when a professional accountant promotes a client’s position to a degree that objectivity may be compromised.
- Aged receivables analysisAn aged receivables analysis groups customer balances by how long they have been outstanding or overdue.
- Agency costAgency costs are the economic costs associated with a principal delegating decisions to an agent whose interests or information may differ.
- Agency relationshipAn agency relationship arises when a principal delegates authority to an agent to act on the principal’s behalf.
- Agency theoryAgency theory examines a relationship in which a principal delegates decisions or work to an agent whose interests and information may differ.
- Aggregate demandAggregate demand is total planned spending on domestically produced final goods and services at different general price levels during a period.
- Aggregate supplyAggregate supply describes the total output of goods and services that producers in an economy are willing and able to supply at different general price levels over a period.
- Aggregation risk in a group auditAggregation risk is the probability that the aggregate of uncorrected and undetected misstatements across components exceeds group financial-statement materiality.
- Aggressive working capital funding policyAn approach that relies relatively heavily on short-term finance to fund working-capital needs, including some longer-lasting needs.
- Agreed-upon proceduresIn an agreed-upon procedures engagement, a practitioner performs procedures agreed with the engaging party and reports the factual findings.
- Agricultural produceAgricultural produce is the harvested product of an entity’s biological assets.
- Allocation of transaction priceAllocation of transaction price assigns the consideration in a customer contract to its distinct performance obligations.
- Allowable capital loss (UK individuals)An allowable capital loss can reduce chargeable gains under the applicable UK capital gains tax rules.
- Allowance for receivablesAn allowance for receivables reduces the amount reported for receivables to reflect estimated non-collection.
- AlphaAn investment's return in excess of a specified risk-adjusted benchmark return, using the model and measurement period stated.
- Altman Z-scoreA multivariable financial-ratio model used as an indicator of possible corporate distress or failure risk.
- AmortisationAmortisation systematically allocates the depreciable amount of an intangible asset with a finite useful life over that life.
- Amortisation of an intangible assetAmortisation of a finite-life intangible asset is the systematic allocation of its depreciable amount over its useful life.
- Amortisation of development costsCapitalised development expenditure is amortised once the resulting asset is available for use, over its estimated useful life.
- Amortised costAmortised cost is a measurement basis that allocates relevant discounts, premiums and transaction costs over a financial instrument’s life using the effective interest method.
- Amortising-loan interestInterest on an amortising loan is calculated using the contractual rate and the outstanding balance for the relevant period.
- AnalysisAnalysis examines information by separating it into relevant parts, identifying patterns and relationships, and explaining what they mean for the issue under consideration.
- Analysis of consolidated financial statementsAnalysis of consolidated financial statements evaluates a group’s reported performance, financial position and cash flows as a single economic entity.
- Analytical proceduresAnalytical procedures evaluate financial information through analysis of plausible relationships among financial and non-financial data.
- Annual exempt amount (UK capital gains tax)The annual exempt amount is the amount of eligible annual net gains an individual can shelter from capital gains tax, subject to applicable rules.
- Annual exemption (UK inheritance tax)An annual exemption for a limited amount of an individual’s qualifying lifetime transfers.
- Annual general meetingA formally convened annual meeting of company members, where applicable law and the company’s constitution require one.
- Annual investment allowance (UK)The annual investment allowance is a capital allowance for qualifying expenditure, subject to an annual limit and statutory conditions.
- AnnuityA series of equal cash flows occurring at equal time intervals for a finite number of periods.
- Annuity factorThe sum of the discount factors for equal periodic payments over a specified finite period.
- Ansoff’s MatrixAnsoff’s Matrix organises growth options by existing or new products and existing or new markets: market penetration, market development, product development and diversification.
- Anthony’s hierarchyAnthony’s hierarchy distinguishes strategic planning, management control and operational control.
- Anti-money launderingAnti-money laundering comprises laws, controls and procedures aimed at preventing and detecting money laundering.
- Anticipatory breach in English contract lawA sufficiently clear refusal or inability to perform a contractual obligation before performance is due.
- Apparent authority (English agency law)Authority a principal represents an agent has, on which a third party relies, even if actual authority is absent or narrower.
- Applicable financial reporting frameworkThe applicable financial reporting framework is the framework adopted by management and, where appropriate, those charged with governance in preparing the financial statements, that is acceptable given the nature of the entity and the objective of the statements or required by law or regulation.
- Application controlsApplication controls operate within business processes and applications to support the completeness, accuracy, validity and authorisation of transactions.
- Applied researchApplied research investigates new knowledge with a specific practical purpose in view.
- Appointment of an auditorAuditor appointment is the selection and formal appointment of an auditor under applicable law, governance rules and engagement procedures.
- Appraisal costAppraisal costs are costs of evaluating whether materials, products, processes or services meet required quality standards.
- Appraisal follow-upAppraisal follow-up checks progress against the actions, objectives and support agreed during a performance review.
- Appropriateness of audit evidenceAppropriateness is the measure of audit evidence quality: its relevance and reliability in supporting the conclusions on which the opinion is based.
- Appropriation of partnership profitAppropriation of partnership profit allocates the business’s profit or loss to its partners under their agreement.
- Approved mileage allowance (UK employment, 2025–26)An approved per-mile amount for an employee’s qualifying business travel in their own vehicle.
- Aptitude testAn aptitude test assesses an ability or potential relevant to learning or performing a type of task.
- Arithmetic meanThe arithmetic mean is the sum of observed values divided by the number of observations.
- Arm’s-length principleThe arm’s-length principle assesses related-party transaction conditions by reference to comparable dealings between independent parties.
- Articles of association (UK company)A UK company’s articles of association set out constitutional rules for its internal governance.
- Artistic-related intangible assetAn artistic-related intangible asset is an identifiable intangible asset associated with qualifying artistic works or rights, such as a copyright acquired in a business combination.
- Ashridge leadership stylesThe Ashridge leadership model distinguishes tells, sells, consults and joins as points on a continuum of employee participation.
- Ashridge portfolio displayThe Ashridge portfolio display assesses business units by their fit with a corporate parent and the parent’s opportunities to add value.
- Aspirational budgetAn aspirational budget or stretch target sets an ambitious result beyond the most likely forecast to encourage improvement.
- AssertionsAssertions are representations, explicit or otherwise, about recognition, measurement, presentation and disclosure embodied in financial statements.
- Assessment centreAn assessment centre uses a structured combination of exercises and observations to evaluate relevant capabilities.
- AssetAn asset is a present economic resource controlled by the entity as a result of past events.
- Asset betaA measure of the systematic business risk of an investment's underlying assets before the effect of financial gearing on equity returns.
- Asset ceilingThe asset ceiling limits a recognised net defined benefit asset to the present value of economic benefits available from refunds or reductions in future contributions.
- Asset made available to an employee (UK tax)A benefit arising when an employer makes an asset available for private use without transferring ownership.
- Asset movement reconciliationAn asset movement reconciliation explains how an opening non-current asset balance becomes the closing balance through additions, disposals, depreciation or amortisation and other applicable movements.
- Asset registerAn asset register is a detailed record of a business’s non-current assets.
- Asset replacement decisionAn asset replacement decision chooses whether and when to replace an existing asset, considering relevant future costs, benefits and service requirements.
- Asset securitisationFinancing in which cash-flow-producing assets are pooled or transferred into a structure that issues securities to investors.
- Asset turnoverAsset turnover measures revenue generated per unit of the asset or capital base used.
- Asset-liability managementThe coordinated management of assets and liabilities to control exposures arising from their cash flows, maturities, rates or currencies.
- AssociateAn associate is an entity over which an investor has significant influence but neither control nor joint control.
- Associate in the consolidated cash flow statementAn associate’s cash flows are not consolidated line by line solely because the investor applies the equity method.
- AssumptionAn assumption is something treated as true for the purpose of reasoning, planning or analysis without being established as certain.
- Assurance conclusionAn assurance conclusion communicates the practitioner’s conclusion about subject matter information against the applicable criteria.
- Assurance engagementAn assurance engagement is an engagement in which a practitioner obtains evidence to express a conclusion designed to enhance intended users’ confidence in subject-matter information measured or evaluated against suitable criteria.
- Assurance evidenceEvidence obtained by a practitioner provides the basis for an assurance conclusion on subject matter information.
- Assurance mappingAssurance mapping relates important risks to controls, reviews and assurance sources.
- Assurance practitionerAn assurance practitioner is the individual or organisation performing an assurance engagement and expressing the conclusion.
- Attainable standardAn attainable standard reflects efficient but realistic performance, allowing appropriate normal losses, rest or maintenance.
- Attainment testAn attainment test assesses knowledge or skill already acquired, rather than primarily estimating potential to learn.
- Attendance recordAn attendance record shows the time an employee was present or clocked in and out.
- Attestation engagementIn an attestation engagement, a party other than the practitioner measures or evaluates the underlying subject matter against criteria and presents the resulting subject matter information.
- AttitudeAn attitude is an evaluative orientation towards a person, object, activity or issue, such as favouring or disliking it.
- Attributable fixed costAn attributable fixed cost relates specifically to a product, segment or activity rather than being a share of common cost.
- Audit committeeAn audit committee is a governance committee that commonly oversees financial reporting, internal controls, the external audit and relevant relationships with auditors.
- Audit confirmation non-responseA non-response occurs when the confirming party does not respond, responds incompletely or the request is returned undelivered.
- Audit data analyticsAudit data analytics uses automated methods to analyse data, identify patterns or exceptions and support audit procedures.
- Audit documentationAudit documentation records the procedures performed, relevant evidence obtained and conclusions reached.
- Audit documentation retentionAudit documentation retention is keeping the completed audit file securely for the period required by applicable professional standards, law and firm policy.
- Audit engagement partnerThe engagement partner is the partner or other individual responsible for the engagement and its performance, and for the report issued on behalf of the firm.
- Audit evidenceAudit evidence is information used by the auditor in reaching the conclusions on which the audit opinion is based.
- Audit exceptionAn audit exception is a difference or deviation identified by a procedure that needs evaluation against the audit objective.
- Audit exemptionAn audit exemption is a legal or regulatory relief from a requirement to obtain a statutory audit for an entity that meets the conditions in a particular jurisdiction.
- Audit expectation gapThe audit expectation gap is the difference between what users believe an auditor does or should achieve and the actual responsibilities and limitations of an audit.
- Audit feeAn audit fee is the amount charged for an audit engagement, determined by the agreed terms and the work and resources required.
- Audit fileAn audit file is one or more folders or other storage media containing audit documentation for an engagement.
- Audit findingAn audit finding is a matter identified by audit work that requires evaluation and, where appropriate, communication or action.
- Audit misstatementA misstatement is a difference between a reported financial statement amount, classification, presentation or disclosure and what the applicable reporting framework requires.
- Audit of accounting estimatesAn audit of an accounting estimate considers estimation uncertainty, complexity, subjectivity and potential management bias.
- Audit planAn audit plan sets out the nature, timing and extent of planned risk-assessment and further audit procedures and other relevant work.
- Audit procedureAn audit procedure is an action designed and performed to obtain audit evidence.
- Audit regulationAudit regulation is the system of legal, professional and oversight requirements governing auditors and audit engagements.
- Audit riskAudit risk is the risk that the auditor expresses an inappropriate opinion when financial statements are materially misstated.
- Audit samplingAudit sampling applies audit procedures to less than all items in a population of audit relevance, with every sampling unit having a chance of selection.
- Audit softwareAudit software performs or assists audit procedures such as recalculation, data extraction or testing of records.
- Audit strategy and planThe overall audit strategy establishes the scope, timing and direction of the engagement; the audit plan details the risk-assessment and further procedures to be performed.
- Audit tenderAn audit tender is a process in which an audit firm proposes to perform an engagement, typically explaining its approach, team, timetable and proposed fees.
- Audit trailAn audit trail links a recorded balance or journal to its source transaction, authorisation and subsequent changes.
- Auditor liability limitation agreementA liability limitation agreement seeks to limit an auditor’s legal liability to a client for specified work, subject to applicable law, professional requirements and the engagement.
- Auditor resignationAuditor resignation is the auditor’s voluntary withdrawal from an appointment, subject to applicable law, ethical requirements and engagement circumstances.
- Auditor rights and dutiesAuditor rights and duties arise from applicable law, professional standards and engagement terms.
- Auditor rotationAuditor rotation refers to changing the responsible audit personnel or, where required, the audit firm after a specified period to address threats such as familiarity.
- Auditor’s duty of careA duty of care is a legal obligation to exercise the standard of care owed to a particular person in the circumstances.
- Auditor’s expertAn auditor’s expert is an individual or organisation with expertise in a field other than accounting or auditing whose work is used to help obtain sufficient appropriate audit evidence.
- Auditor’s point estimate or rangeAn auditor’s point estimate or range is an amount or interval developed to evaluate management’s accounting estimate when that approach is appropriate.
- Auditor’s reportThe auditor’s report communicates the auditor’s opinion on the financial statements and other information required by the applicable standards and circumstances.
- Auditor’s report dateThe auditor’s report date is the date of the report on the financial statements.
- Authorised share capitalAuthorised capital is a legal ceiling on the nominal amount of shares a company may issue where its governing law or constitution uses that concept.
- AuthorityAuthority is the legitimate right within an organisation to make specified decisions, direct work or use resources.
- Automated journal entryAn automated journal entry is generated by accounting software from an approved transaction, rule or connected process.
- Average growth forecastingAverage growth forecasting projects a quantity using a growth rate summarised from past observations.
- Average inventoryAverage inventory represents the typical quantity or value held over a period on the chosen calculation basis.
- Avoidable costAn avoidable cost can be eliminated by selecting a particular alternative, such as discontinuing a product or closing a facility.
- Avoidance under the CISGA declaration ending the contract under a ground and procedure provided by the CISG.
B
- BCG MatrixThe BCG Matrix classifies business units or products using market growth and relative market share, commonly labelling stars, cash cows, question marks and dogs.
- Back drawer issueA back drawer issue is a service with both weak ability to serve effectively and low public or political support in the public sector portfolio matrix.
- Backward integrationBackward integration extends an organisation’s activities towards earlier stages of its supply chain, such as producing inputs previously bought from suppliers.
- Bad-debt cost in credit policyThe expected amount lost through customer non-payment when evaluating a credit decision, separate from the financing cost of outstanding receivables.
- Badges of trade (UK tax)Factors used together to assess whether an activity amounts to trading.
- Balance brought downA balance brought down is the opening balance of an ongoing ledger account, transferred from the previous period’s closing balance.
- Balance carried downThe balance carried down is the figure inserted to make the debit and credit totals of a ledger account equal when balancing it.
- Balance of paymentsThe balance of payments is a statistical record of transactions between an economy’s residents and non-residents during a period.
- Balanced scorecardThe balanced scorecard translates strategy into linked objectives and measures across financial, customer, internal-process and learning-and-growth perspectives.
- Balancing allowanceA final tax deduction that may arise when the relevant disposal value is below the remaining tax value, under the specified tax rules.
- Balancing chargeA taxable adjustment that may arise when a relevant disposal value exceeds the remaining tax value, under the specified tax rules.
- Balancing ledger accountsBalancing a ledger account finds the difference between its debit and credit totals.
- Baldrige Excellence FrameworkThe Baldrige Excellence Framework helps an organisation assess how its leadership, strategy, people, operations and information work together to achieve sustainable results.
- Bank chargesBank charges are amounts charged by a bank for services such as account administration, transfers or overdraft facilities.
- Bank interestBank interest is interest credited or charged on a bank balance.
- Bank overdraftA bank overdraft arises when withdrawals exceed funds in a bank account and the business owes the bank.
- Bank reconciliationA bank reconciliation explains the difference between the bank ledger balance and the bank statement at a date, after correcting omissions and errors in the ledger.
- Bargain purchase gainA bargain purchase gain arises when the acquisition-date amount of identifiable net assets acquired exceeds the relevant IFRS 3 aggregate used to calculate goodwill.
- Bargaining powerBargaining power is the ability of a party to influence the terms of an exchange or negotiation.
- Barrier to entryA barrier to entry is a condition that makes it harder for a new competitor to enter and compete in a market.
- Basic earnings per shareBasic earnings per share is profit or loss attributable to ordinary equity holders divided by the weighted average number of ordinary shares outstanding.
- Basic researchBasic research develops understanding of underlying phenomena without a particular immediate application as its primary aim.
- Basic standardA basic standard is retained for a relatively long period as a consistent benchmark for observing trends.
- Basis pointOne hundredth of a percentage point, used to express changes or spreads in rates and yields.
- Basis riskThe risk that the exposure and its intended offset do not move together as expected.
- Batch costingBatch costing accumulates costs for a group of similar units produced together.
- Baumol cash modelA cash-management model that balances the fixed cost of transferring funds into cash against the opportunity cost of holding cash.
- Bearer plantA bearer plant is a living plant used to produce agricultural produce over more than one period, with a remote likelihood of sale as produce except incidental scrap.
- BehaviourBehaviour is what people do, including their actions and responses in particular circumstances.
- Behavioural financeThe study of how psychological biases and social behaviour affect financial decisions and market outcomes.
- Behavioural leadership theoriesBehavioural leadership theories examine what leaders do and the styles they use, rather than focusing solely on personal traits.
- Belbin’s team rolesBelbin’s team-role model describes nine clusters of behaviour through which people contribute to a team: Plant, Monitor Evaluator, Specialist, Resource Investigator, Co-ordinator, Teamworker, Shaper, Implementer and Completer Finisher.
- BeliefA belief is something a person accepts as true about the world, themselves or others.
- BenchmarkingBenchmarking compares processes, measures or outcomes with an appropriate reference to identify performance gaps and improvement opportunities.
- Benefits of cash flow informationCash flow information helps users assess how a business generates and uses cash, its ability to meet payments and its need for external finance.
- Bennis’s leadership competenciesBennis’s leadership approach identifies four competencies often described as management of attention, meaning, trust and self.
- Beta (systematic risk)Beta measures how a security’s or portfolio’s returns co-vary with a specified market benchmark relative to the benchmark’s variance.
- Beyond budgetingBeyond budgeting is an adaptive management approach that seeks to reduce reliance on rigid annual budget contracts.
- Bid and offer pricesA bid price is the price a buyer is willing to pay; an offer or ask price is the price a seller is willing to accept.
- Bid and offer ratesA dealer's paired prices or rates for buying and selling a specified instrument or transaction, interpreted from the dealer's perspective.
- Bid-offer spreadThe difference between the prices at which a dealer is willing to buy and sell the specified asset or currency.
- Big dataBig data describes data whose scale, speed or variety can require approaches beyond conventional processing.
- Big data in auditBig data describes data sets whose size, variety or rate of generation make traditional processing methods difficult.
- Bill of ladingA transport document acknowledging goods received by a carrier and evidencing terms of carriage.
- Bill of materialsA bill of materials identifies the materials and quantities required for a specified product or assembly.
- Bill-and-hold arrangementA bill-and-hold arrangement is a contract in which a customer is billed for a product but the seller retains physical possession until later delivery.
- Bin cardA bin card records physical quantities received, issued and remaining for a material item, commonly at its storage location.
- Binding constraintA binding constraint is satisfied exactly at the solution, leaving no slack or surplus on that restriction.
- Binding precedentA legal rule from a relevant higher court’s decision that a lower court must apply in materially similar circumstances.
- Biological assetA biological asset is a living animal or plant.
- Biological transformationBiological transformation comprises growth, degeneration, production and procreation that cause qualitative or quantitative changes in a biological asset.
- Black–Scholes option pricing modelA model for valuing options using the underlying value, exercise price, time, volatility and risk-free rate under specified assumptions.
- Blake and Mouton’s managerial gridBlake and Mouton’s managerial grid describes leadership using concern for production or task on the horizontal axis and concern for people on the vertical axis, each scored from 1 to 9.
- Blanket absorption rateA blanket absorption rate uses one overhead rate across a whole factory or organisation.
- Block selectionBlock selection chooses a contiguous sequence of items from a population, such as invoices for a particular week.
- Blocked fundsFunds that cannot currently be transferred or distributed as desired because of legal, regulatory or contractual restrictions.
- Board chairThe board chair leads the work of the board and supports its effectiveness.
- Board diversityBoard diversity concerns the range of relevant backgrounds, experiences, skills and perspectives represented among directors.
- Board of directorsA board of directors provides collective direction, oversight and accountability for an organisation under its governance framework.
- Bond marketThe market for issuing and trading debt securities such as corporate and government bonds.
- Bond with attached warrantsA debt security issued with rights allowing the holder to subscribe for specified additional securities under warrant terms.
- Bonus (capitalisation) issuesA bonus issue gives existing shareholders additional shares without requiring them to pay cash.
- Bonus adjustment factor in earnings per shareThe EPS bonus adjustment factor restates the share denominator for a bonus issue or bonus element in a rights issue.
- Bonus and rights issues of shares (UK capital gains)Changes to a shareholder’s holding that can affect the number and pooled cost of shares.
- Books of prime entryBooks of prime entry organise transaction data before amounts are posted to ledger accounts.
- BoomA boom is a period of particularly strong economic activity, commonly associated with high output, employment, spending and business confidence.
- Borrowing costsBorrowing costs are interest and other costs incurred in connection with borrowing funds.
- Bottleneck resourceA bottleneck resource limits the flow of output through a system because its capacity is scarce relative to demand or the capacities of other stages.
- Bottom-up budgetingBottom-up budgeting develops proposals from managers close to operations and consolidates them into the overall plan.
- Boundaryless organisationA boundaryless organisation seeks to reduce barriers that obstruct collaboration between functions, levels, locations and external partners.
- Bowman’s strategy clockBowman’s strategy clock compares competitive positions using price and customers’ perceived benefits.
- BranchA branch is an operating part of the same legal entity rather than a separately incorporated subsidiary.
- BrandA brand is an identifying name, design or other distinctive identity associated with an offering or organisation and the meanings people attach to it.
- Brand awarenessBrand awareness concerns recognition or recall of a brand among a defined audience.
- Brand loyaltyBrand loyalty concerns a customer’s continuing preference for, commitment to or repeat purchase of a brand.
- Breach of contract (English law)A failure to perform a contractual obligation as required by the contract.
- Break-even chartA break-even chart plots revenue and total cost against activity, with fixed cost shown where appropriate.
- Break-even pointThe break-even point is the activity level at which total revenue equals total cost and profit is zero under the specified cost-volume-profit assumptions.
- BriberyBribery involves offering, promising, providing, requesting or accepting an improper advantage to influence the exercise of a role or duty.
- Brundtland ReportThe Brundtland Report, Our Common Future, was published in 1987 by the World Commission on Environment and Development.
- BudgetA budget is a quantified plan for a defined future period, linking intended activity with the resources, income and cash consequences expected.
- Budget committeeA budget committee coordinates budget preparation and resolves conflicts between functions under the organisation’s governance arrangements.
- Budget manualA budget manual documents the procedures, responsibilities, formats, assumptions and timetable used in budgeting.
- Budget periodA budget period is the span of time covered by a budget.
- Budgetary controlBudgetary control compares actual results with appropriate budgets, explains differences and supports action or learning.
- Budgetary slackBudgetary slack is the deliberate inclusion of an easier performance margin, such as understating achievable revenue or overstating necessary cost.
- Budgeting processThe budgeting process translates objectives and assumptions into coordinated operational and financial plans.
- Buffer inventoryBuffer inventory is extra stock held to reduce the risk that demand or replenishment delays cause a stockout.
- Building Block modelFitzgerald and Moon’s Building Block model links performance dimensions, standards and rewards, particularly in service organisations.
- Burden of proof (England and Wales)The responsibility for establishing a fact or issue in legal proceedings.
- Business Asset Disposal Relief (UK)A relief giving a special capital-gains tax rate on qualifying business disposals, subject to conditions and a lifetime limit.
- Business angel financeInvestment by individuals in early-stage or growing businesses, often accompanied by personal expertise, contacts and advice.
- Business asset rollover relief (UK capital gains)Relief that can defer a gain when qualifying business-asset proceeds are reinvested in eligible replacement assets.
- Business caseA business case explains why a proposed investment or project should proceed and provides a basis for approval and continuing review.
- Business combinationA business combination is a transaction or other event in which an acquirer obtains control of one or more businesses.
- Business combination achieved in stagesA business combination achieved in stages occurs when an acquirer obtains control of a business in which it already held an equity interest.
- Business cycleThe business cycle describes fluctuations in economy-wide activity around its longer-term path.
- Business entity conceptThe business entity concept records a business’s transactions separately from its owner’s private affairs.
- Business partneringBusiness partnering is collaboration between organisations, teams or professionals to achieve agreed objectives by combining capabilities, resources or activities.
- Business planA business plan explains an enterprise’s objectives, offering, market, operations, resources, risks and financial expectations.
- Business probity riskBusiness probity risk concerns the possibility that dishonest, unfair or otherwise improper conduct undermines the integrity of business dealings.
- Business process re-engineeringBusiness process re-engineering fundamentally rethinks and redesigns an end-to-end process to achieve substantial improvements in outcomes such as cost, quality, speed or service.
- Business process redesignBusiness process redesign changes the way an end-to-end activity is organised to improve relevant outcomes such as quality, speed, cost or customer experience.
- Business relationships and independenceA close business relationship between an audit firm or relevant individual and an audit client can create self-interest or intimidation threats to independence.
- Business reorganisationA change to the structure or ownership of business activities to improve strategic, financial or operational outcomes.
- Business reviewA business review is a narrative explanation of an entity’s activities, performance, position and prospects.
- Business riskBusiness risk arises from significant conditions, events, circumstances, actions or inactions that could adversely affect an entity’s ability to achieve its objectives and execute its strategies.
- Business strategyBusiness strategy concerns how a business competes and creates value for its chosen customers and other relevant stakeholders.
- Business valuationEstimating the value of an ownership interest or operating business for a defined purpose, date and set of assumptions.
- Buyer obligations under the CISGThe CISG buyer must pay the price and take delivery as required by the contract and Convention.
- By-productA by-product is a relatively incidental or low-value output obtained alongside a main product in a joint process.
C
- CISG impediment exemptionA party may be exempt from damages for non-performance caused by a qualifying impediment beyond its control.
- CISG instalment contractA sales contract calling for delivery of goods in separate instalments, with special avoidance rules under the CISG.
- CISG price reductionA buyer’s proportionate reduction of the price for non-conforming goods under CISG article 50.
- CISG sphere of applicationThe CISG governs qualifying international sales of goods where its scope and application requirements are met, subject to exclusions and party agreement.
- COSO ERM frameworkThe COSO Enterprise Risk Management framework provides a structured approach to integrating risk with strategy and performance.
- Cadbury ReportThe Cadbury Report is the 1992 UK report on the financial aspects of corporate governance produced by a committee chaired by Sir Adrian Cadbury.
- Call optionAn option giving its holder the right to buy the specified underlying asset at the exercise price under the contract's terms.
- Called-up capitalCalled-up capital is the part of the nominal value of issued shares that shareholders have been asked to pay.
- Capacity ratioThe capacity ratio compares actual hours worked with budgeted hours: actual hours ÷ budgeted hours × 100%.
- CapitalIn a sole trader’s accounts, capital is the owner’s residual interest in the business: assets less liabilities.
- Capital (factor of production)Capital as a factor of production consists of produced resources used to make goods or provide services, such as machinery, tools and productive facilities.
- Capital allowance balancing allowance (UK)A deduction for a qualifying remaining capital-allowance pool balance when a balancing event permits it.
- Capital allowance balancing charge (UK)A tax charge that can arise when a capital-allowance disposal value exceeds the relevant pool balance.
- Capital allowances (UK tax)Capital allowances are tax deductions for qualifying capital expenditure under specified UK rules.
- Capital asset pricing modelA model linking an investment's required return to the risk-free rate and its systematic risk relative to the market.
- Capital employedCapital employed is a measure of the resources committed to a business.
- Capital expenditureCapital expenditure is expenditure included in the cost of an asset because it meets the relevant recognition requirements.
- Capital gains tax (UK)Capital gains tax is a tax on chargeable gains made by individuals on disposing of assets.
- Capital gains tax Self Assessment payment date (UK)The normal 31 January payment deadline following the tax year for capital gains tax due through Self Assessment.
- Capital investment projectA capital investment project is a proposed commitment of resources intended to provide benefits over future periods.
- Capital maintenance (UK company law)Capital maintenance rules restrict how a company returns value to members and reduces its capital.
- Capital marketA market for equity and longer-term debt finance, including new issues and trading of existing securities.
- Capital rationingA limit on available investment funding that prevents a business from undertaking all otherwise acceptable projects.
- CapitalisationCapitalisation means recognising expenditure as part of an asset’s carrying amount rather than immediately recognising it as an expense.
- Carbon creditA carbon credit is an issued unit representing a specified amount of greenhouse gas emissions reduced, avoided or removed under a crediting programme.
- Carriage inwardsCarriage inwards is the cost of transporting purchased goods to the business.
- Carriage outwardsCarriage outwards is the cost of delivering goods to customers.
- Carrying amountCarrying amount is the amount at which an asset or liability is recognised in the statement of financial position.
- CartelA cartel is an arrangement between competitors to coordinate aspects of market behaviour instead of competing independently.
- CashCash comprises cash on hand and demand deposits.
- Cash and cash equivalentsCash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid investments readily convertible to known cash amounts with insignificant risk of changes in value.
- Cash bookA cash book records cash and bank receipts and payments.
- Cash countA cash count is a physical count of currency and coins held at a particular time, compared with relevant records and investigated for differences.
- Cash cycleThe cash operating cycle estimates the time between paying suppliers and collecting cash from customers.
- Cash discounts allowedCash discounts allowed are settlement discounts granted by a seller to customers who pay within the stated period.
- Cash discounts receivedCash discounts received are settlement discounts obtained by a buyer for paying suppliers promptly.
- Cash equivalentsCash equivalents are short-term, highly liquid investments held to meet short-term cash commitments, readily convertible to known cash amounts and subject to insignificant risk of changes in value.
- Cash flow analysisCash flow analysis examines cash generated and used by operating, investing and financing activities to assess an entity’s cash position and financial decisions.
- Cash flow forecastA forward-looking schedule of expected cash receipts, payments and balances over specified periods.
- Cash flow hedgeA cash flow hedge is a qualifying hedge of exposure to variability in cash flows attributable to a particular risk that could affect profit or loss.
- Cash flowsCash flows are inflows and outflows of cash and cash equivalents.
- Cash generated from operationsCash generated from operations is an intermediate calculation of operating cash flows, commonly derived by adjusting an appropriate profit subtotal for non-cash items and working-capital movements.
- Cash in transitCash in transit is a payment sent by one entity that has not yet been recorded by the receiving entity at the reporting date.
- Cash managementPlanning, collecting, paying and investing cash so obligations can be met while unnecessary idle balances are limited.
- Cash offerAn acquisition offer in which the bidder proposes to pay target shareholders cash for their securities.
- Cash receipts and payments controlsCash receipts and payments controls are procedures designed to authorise, record, safeguard and reconcile cash transactions.
- Cash shortfallA cash shortfall occurs when cash available at the relevant time is insufficient for the payments or minimum liquidity requirement being assessed.
- Cash-generating unitA cash-generating unit is the smallest identifiable group of assets that generates cash inflows largely independent of the inflows from other assets or groups.
- Categorical dataCategorical data describe membership of groups or classes.
- CentralisationCentralisation concentrates specified decision-making authority at a higher organisational level or central unit.
- Centralised treasuryA group-level function coordinating financing, liquidity, banking and financial risk management across the organisation.
- Certificate of depositA certificate evidencing a bank deposit, commonly negotiable and bearing interest under stated terms.
- Cessation of the equity methodAn investor discontinues the equity method when an investment ceases to be an associate or joint venture, subject to the detailed IAS 28 requirements.
- Chain of custodyChain of custody is the documented record of who collected, handled, transferred and stored evidence and when.
- Change in depreciation methodA revision to the depreciation method is a change in accounting estimate, applied prospectively to reflect the revised expected pattern of consumption.
- Change in ownership without loss of controlA change in a parent’s ownership interest in a subsidiary that does not result in loss of control is accounted for as an equity transaction.
- Change in tax rate and deferred taxA change in tax rate can change the measurement of deferred tax balances when the new rate is enacted or substantively enacted by the reporting date.
- Change kaleidoscopeThe change kaleidoscope is a framework associated with Balogun and Hope Hailey for choosing an approach to change that fits its context.
- Change managementChange management coordinates the people, process, system and control work needed to move from current arrangements to a desired future state.
- Chargeable gain (UK)A chargeable gain is a gain on an asset disposal calculated under the applicable UK capital gains rules.
- Chargeable gains group (UK corporation tax)A principal company and qualifying subsidiaries grouped for corporation-tax chargeable gains rules.
- Chargeable lifetime transfer (UK inheritance tax)A lifetime transfer that is chargeable to inheritance tax when made, subject to exemptions and the available nil rate band.
- Chart of accountsA chart of accounts is the organised list of ledger accounts and their identifying codes used by an accounting system.
- ChartismAnalysing past market prices and trading volumes to identify patterns used in trading decisions.
- Chattel marginal relief (UK capital gains)A limit on the chargeable gain on a qualifying chattel sold for more than £6,000.
- Chief executive officerThe chief executive officer leads executive management and is accountable to the board for managing the organisation and implementing its agreed strategy.
- Circular flow of incomeThe circular flow of income is a model linking production, income and expenditure across an economy.
- Classification assertionClassification concerns whether transactions, events, balances and disclosures are recorded or presented in appropriate accounts and categories under the applicable framework.
- Climate transition riskClimate transition risk is exposure to adverse effects of the shift toward a lower-carbon economy, including policy, technology, market or reputational change.
- Climate-related physical riskPhysical climate risk is exposure to adverse effects of climate-related events or longer-term changes in climate patterns.
- Close family under the IESBA CodeThe IESBA Code defines close family as a parent, child or sibling who is not an immediate family member.
- Closing inventoryClosing inventory is inventory remaining at the end of the reporting period.
- Closing rateThe closing rate is the spot exchange rate at the end of the reporting period.
- Cluster samplingCluster sampling selects groups of population units and then examines units within the selected groups.
- CoachingCoaching is a development process that helps a person improve particular skills, performance or goals through structured discussion, practice and feedback.
- Code of conductA code of conduct sets out principles and behavioural requirements for members of an organisation or profession.
- CodeterminationCodetermination gives employees formal participation in specified organisational decisions under the relevant governance arrangements.
- Coefficient of determinationR-squared compares a regression model’s squared prediction errors with a specified baseline based on the observed mean.
- Coefficient of variationThe coefficient of variation compares standard deviation with the mean, usually as SD÷mean×100%.
- Coercive powerCoercive power is influence based on the perceived ability to impose an adverse consequence.
- Cold file reviewA cold file review is a review of an engagement file after the report has been issued, commonly used in a firm’s monitoring activities.
- Commercial acumenCommercial acumen is the ability to understand an organisation’s business context and use that understanding to make practical, well-reasoned recommendations.
- Committed costA committed cost is a future obligation arising from an earlier decision, such as a signed lease or employment arrangement.
- Committed facilityA financing arrangement that a lender is contractually obliged to make available on agreed terms while the borrower meets the specified conditions.
- CommitteeA committee is a group given a defined purpose, membership and responsibilities to carry out work collectively.
- Committee chairA committee chair leads the committee’s work and meetings so that it can fulfil its remit.
- Committee secretaryA committee secretary supports the committee’s administration and records.
- Common costA common cost supports several products, segments or activities and cannot be traced wholly to one of them on the relevant basis.
- Common marketA common market is an integration arrangement extending covered trade freedoms to movement of factors such as labour and capital.
- CommunicationCommunication exchanges meaning through messages between people or groups.
- Communication barrierA communication barrier interferes with transmitting or understanding the intended meaning of a message.
- Companies Act 2006The Companies Act 2006 is UK legislation that sets out a broad framework for companies, directors and corporate reporting.
- Company administration (UK insolvency law)An insolvency procedure in which an administrator pursues statutory objectives for the company and its creditors.
- Company capital loss (UK corporation tax)An allowable loss on a company’s asset disposal that is generally relieved against chargeable gains.
- Company car benefit (UK income tax)The taxable value of a company car made available for an employee’s private use.
- Company car fuel benefit (UK income tax)A separate taxable benefit that can arise when an employer provides fuel for private use in a company car.
- Company indexation allowance (UK corporation tax)An inflation-based deduction available on qualifying company gains, frozen at December 2017.
- Company liquidation (UK)A formal process to wind up a company’s affairs, realise assets and distribute proceeds according to the applicable rules.
- Company loan relationship (UK corporation tax)A company’s money-debt relationship whose taxable debits and credits are classified as trading or non-trading.
- Company promoter duties (UK)A promoter organises the formation of a company and owes duties when acting in relation to its formation.
- Company property business loss (UK corporation tax)A loss from a UK property business relieved under the corporation tax loss rules.
- Company registration and incorporation (UK)Registration is the statutory process by which a company is formed as a separate legal person.
- Company residence (UK corporation tax)A company’s UK tax residence status, determined by incorporation and management rules.
- Company trading loss relief (UK corporation tax)Relief that can offset a company’s trading loss against qualifying current, earlier or later profits.
- ComparabilityComparability helps users identify similarities and differences between entities or periods.
- Comparative financial statementsComparative financial statements present amounts and disclosures for prior periods as separate statements comparable with the current period.
- Comparator (control system)A comparator in a control-system model compares measured performance with a target or reference and identifies a difference requiring interpretation.
- Compensating errorsCompensating errors are separate errors whose effects on debit and credit totals offset one another.
- CompetenceCompetence is the ability to apply relevant knowledge, skills and behaviours to perform a task or role to an appropriate standard.
- Competence frameworkA competence framework sets out the knowledge, skills and behaviours needed to perform roles effectively.
- Competition and Markets AuthorityThe Competition and Markets Authority is a UK public authority with competition and consumer responsibilities under its applicable statutory framework.
- Competition policyCompetition policy comprises measures intended to protect or promote effective competition and address harmful restrictions of it.
- Competitive advantageCompetitive advantage enables an organisation to create value or achieve a favourable position relative to relevant competitors.
- Competitive benchmarkingCompetitive benchmarking compares performance or practices with competitors operating in a relevant market.
- Compilation engagementA compilation engagement uses accounting and financial reporting expertise to assist management in preparing and presenting financial information.
- Complementary productComplementary products are goods or services used together so demand for one can influence demand for the other.
- Complementary-product pricingComplementary products are used together, so the price and demand of one can affect the other.
- Complete reversal of entriesA complete reversal of entries records the debit and credit for a transaction on the opposite sides from those required.
- Completeness assertionThe completeness assertion concerns whether all items that should have been recorded or disclosed are included.
- Complex business structureA complex business structure involves interdependent units or partner relationships with differing authority, objectives, information and performance responsibilities.
- Compliance riskCompliance risk is the possibility that an entity fails to comply with applicable laws, regulations or internal requirements.
- Compliance testingCompliance testing checks conduct or transactions against specified laws, regulations, policies or other requirements.
- Compliance with accounting standardsCompliance with accounting standards means applying all relevant requirements of the standards governing the financial statements.
- Compliance-based ethical approachA compliance-based ethical approach emphasises rules, monitoring and consequences to encourage acceptable conduct and prevent breaches.
- Comply or explainComply or explain is a governance reporting approach requiring an entity to apply code provisions or explain departures where the relevant rules permit.
- Component auditorA component auditor performs audit work related to a component for a group audit under the direction and supervision of the group engagement team, as applicable.
- Component depreciationA significant part of an item of property, plant and equipment is depreciated separately when its cost is significant in relation to the total item.
- Component of an entityA component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting, from the rest of the entity.
- Component performance materialityComponent performance materiality is an amount set for work on a component to reduce aggregation risk to an appropriately low level.
- Composite cost unitA composite cost unit combines two or more service dimensions to provide a meaningful basis for unit cost.
- Compound financial instrumentA compound financial instrument issued by an entity contains both a financial liability component and an equity component under IAS 32.
- CompoundingCalculating a future amount by earning returns on both the original amount and accumulated returns.
- Computerised accounting systemA computerised accounting system records, processes and reports transactions using software.
- Conceptual Framework for Financial ReportingThe Conceptual Framework explains the objectives and concepts underlying general purpose financial reporting.
- Conditional formulaA conditional formula returns a result according to whether a stated test is met.
- ConfidentialityConfidentiality requires a professional accountant to respect information acquired through professional relationships and not disclose or use it improperly.
- Conflict of interestA conflict of interest arises when professional interests or duties relating to one party are incompatible with those relating to another party or with the accountant’s own interests.
- Conflict resolutionConflict resolution addresses disagreement by understanding the issues, interests and effects, then seeking a workable response.
- Conflicting objectivesConflicting objectives arise when pursuing one desired outcome or stakeholder aim makes another harder to achieve.
- Conglomerate diversificationConglomerate diversification is expansion into businesses with little or no significant connection to the organisation’s existing products, markets or capabilities.
- Connected stakeholderA connected stakeholder has a direct economic or contractual relationship with the organisation in the common three-way internal–connected–external classification.
- ConsequentialismConsequentialism judges conduct by its consequences according to the theory’s account of desirable outcomes.
- Conservative working capital funding policyAn approach that uses relatively more long-term finance for permanent and part of fluctuating working-capital needs.
- Consideration in English contract lawSomething of legal value given or promised in exchange for another party’s promise under the relevant contract-law rules.
- Consideration transferredConsideration transferred is what the acquirer gives in exchange for control of a subsidiary, measured at acquisition-date fair value for goodwill calculations.
- Consignment arrangementA consignment arrangement is one in which a product is delivered to another party, such as a dealer, while the supplier retains control until a later event.
- ConsistencyConsistency means applying accounting policies and presentation methods consistently to similar transactions and from one period to the next.
- Consolidated financial statementsConsolidated financial statements present a parent and its subsidiaries as one economic entity.
- Consolidated statement of financial positionA consolidated statement of financial position presents the assets, liabilities and equity of a parent and its subsidiaries as a single economic entity at a reporting date.
- ConstraintA constraint is a restriction on feasible activity, such as available resource, maximum demand or a minimum contractual requirement.
- Constructive dismissal (Great Britain)An employee may claim constructive dismissal after resigning in response to a serious breach of the employment contract by the employer.
- Constructive obligationA constructive obligation arises when an entity’s established pattern of past practice, published policies or sufficiently specific current statement has created a valid expectation in other parties that it will accept particular responsibilities.
- ConsumableA consumable is a material or supply used up in production, service delivery or an entity’s operations.
- ConsumerA consumer is a final user or purchaser for final consumption of a good or service, rather than someone buying it primarily for resale or further business production.
- Consumer Prices IndexA consumer price index measures changes in prices for a defined set of goods and services purchased by consumers, using an appropriate weighting system.
- Content theories of motivationContent theories of motivation examine what needs or factors may motivate people.
- Contingency (business planning)A contingency in business planning is a possible circumstance or event for which plans may need to allow.
- Contingency approach to managementA contingency approach to management argues that effective arrangements depend on relevant circumstances rather than one best practice for every organisation.
- Contingency leadership theoriesContingency leadership theories explain effectiveness through the relationship between leadership and situational factors.
- Contingent assetA contingent asset is a possible asset arising from past events whose existence will be confirmed by uncertain future events not wholly within the entity’s control.
- Contingent considerationContingent consideration is consideration in a business combination that depends on future events or conditions, such as performance targets.
- Contingent feeA contingent fee is calculated on a predetermined basis related to the outcome or result of an engagement.
- Contingent liabilityA contingent liability is a possible obligation confirmed by uncertain future events, or a present obligation not recognised because an outflow is not probable or cannot be measured reliably.
- Contingent liability in a business combinationAn acquired contingent liability may be recognised at acquisition under IFRS 3 even when an outflow is not probable, subject to the standard’s criteria.
- Contingent workforceA contingent workforce supplies labour or expertise through arrangements outside a continuing permanent core, such as temporary or agency work and some independent contracting.
- Contingently issuable ordinary sharesContingently issuable ordinary shares are ordinary shares issuable for little or no cash or other consideration when specified conditions in an agreement are satisfied.
- Continuing professional developmentContinuing professional development is ongoing learning that maintains and develops competence for present and future responsibilities.
- Continuous improvementContinuous improvement makes repeated, evidence-based enhancements to processes, resource use and customer outcomes.
- Continuous inventory recordsContinuous, or perpetual, inventory records update quantities and costs as receipts, issues and other inventory movements occur.
- Continuous numerical dataContinuous numerical data measure quantities that can take any value within a relevant range, subject to measurement precision.
- Continuous stocktakingContinuous stocktaking counts selected inventory items throughout the year on a planned cycle rather than relying only on one complete year-end count.
- Contra entriesA contra entry records a transaction affecting two related accounts within the same set of records.
- ContractFor revenue accounting, a contract is an agreement between parties that creates enforceable rights and obligations.
- Contract assetA contract asset is a right to consideration for goods or services already transferred when the right depends on something other than the passage of time.
- Contract condition (English law)A contractual term whose breach can give the innocent party a right to terminate, subject to applicable law.
- Contract liabilityA contract liability is an obligation to transfer goods or services for customer consideration received or due before the entity performs.
- Contract of service and contract for servicesA contract of service usually describes employment; a contract for services usually describes an engagement to provide services.
- Contract warranty (English law)A contractual term whose breach generally gives a damages remedy but not a right to terminate solely for that breach.
- Contract-related intangible assetA contract-related intangible asset is an identifiable intangible asset arising from contractual or other legal rights, such as a qualifying licence or franchise agreement.
- Contractual cash flowsContractual cash flows are cash payments or receipts specified by the terms of a financial instrument.
- ContributionContribution is sales revenue less variable costs for the relevant output.
- Contribution centreA contribution centre is a responsibility unit evaluated using its contribution, normally revenue less the variable costs included in the specified measure.
- Contribution chartA contribution chart presents revenue, variable cost and fixed cost so the contribution available to cover fixed cost is visible.
- Contribution-to-sales ratioThe contribution-to-sales ratio is contribution divided by sales revenue, expressed as a percentage.
- ControlAn investor controls an investee when it has power over the investee, exposure or rights to variable returns and the ability to use that power to affect those returns.
- Control accountA control account summarises a class of transactions while detailed accounts hold the individual items.
- Control activitiesControl activities are policies and procedures that help ensure management directives are carried out, including authorisation, reconciliation, verification and relevant information-processing controls.
- Control deficiencyA control deficiency exists when a control is designed or operated in a way that does not prevent, or detect and correct, misstatements on a timely basis, or when a necessary control is missing.
- Control environmentThe control environment comprises governance and management functions, attitudes and actions that establish the context for an entity’s system of internal control.
- Control questionnaireA control questionnaire records information about controls relevant to the audit.
- Control riskControl risk is the risk that a potentially material misstatement in an assertion will not be prevented, or detected and corrected on a timely basis, by the entity’s system of internal control.
- Controllability principleThe controllability principle seeks to evaluate managers on results they can meaningfully influence over the relevant period.
- Controllable costA controllable cost is one a specified manager can meaningfully influence within the relevant decision period.
- Controllable profitControllable profit is profit calculated using the revenues and costs that the specified manager can influence over the assessment period.
- Conversion premiumThe amount by which a convertible security's market price exceeds the current value of the shares obtainable on conversion, using a stated basis.
- Convertible debtDebt that gives its holder a contractual right to exchange it for shares on specified terms.
- Convertible securityA convertible security gives its holder a contractual right or mechanism to exchange one security for another on specified terms.
- ConvexityThe curvature of the relationship between a bond's price and its yield, showing how duration changes as yield changes.
- CooperativeA cooperative is an organisation owned and controlled by members to meet shared economic, social or other needs.
- CoordinatingCoordinating aligns interdependent activities so that their timing, outputs and resources support shared objectives.
- Core competenceA core competence is an important organisational capability combining knowledge, skills, processes or relationships that supports customer value and competitive advantage.
- Corporate code of ethicsA corporate code of ethics states the principles and expected conduct an organisation uses to guide its people.
- Corporate governanceCorporate governance is the system by which an organisation is directed and controlled, including the roles and relationships of the board, management, owners and other stakeholders.
- Corporate objectiveA corporate objective states a desired outcome for the organisation as a whole.
- Corporate parentingCorporate parenting concerns how a group’s corporate centre influences and supports its business units.
- Corporate portfolio restructuringCorporate portfolio restructuring changes the mix of businesses, activities or assets held by an organisation.
- Corporate reportingCorporate reporting is the communication by an organisation of information about its activities, performance, position, prospects and relevant risks to users.
- Corporate social responsibilityCorporate social responsibility concerns how an organisation addresses the social and environmental consequences of its activities and relationships, alongside its economic and legal responsibilities.
- Corporate strategyCorporate strategy concerns the overall scope and direction of an organisation and how value is created across its activities or businesses.
- Corporation tax (UK)A UK tax charged on taxable profits of companies and certain other organisations.
- Corporation tax accounting period (UK)A corporation tax accounting period is the period covered by a company tax return and cannot exceed 12 months.
- Corporation tax financial year (UK)The 1 April to 31 March year for which corporation tax rates are set.
- Corporation tax normal payment date (UK)The usual corporation-tax payment deadline of nine months and one day after an accounting period ends.
- Correction of errorsCorrecting an error means identifying what was recorded, comparing it with the correct entry and posting only the adjustment needed.
- CorrelationCorrelation describes how variables vary together.
- Correlation coefficientPearson’s correlation coefficient measures the direction and strength of a linear association between two variables on a scale from−1 to+1.
- Corresponding figuresCorresponding figures are prior-period amounts and disclosures included as an integral part of current-period financial statements, intended to be read in relation to current-period amounts.
- CorruptionCorruption involves misuse of entrusted authority or influence for private benefit.
- CostCost is the amount given up to acquire or produce an asset, measured under the relevant accounting requirements.
- Cost accountingCost accounting records, classifies and analyses the costs of resources, activities, products or services.
- Cost acquisition synergyAn incremental reduction in combined operating costs expected from a merger or acquisition compared with separate operation.
- Cost behaviourCost behaviour describes how a cost changes as a relevant activity driver changes over a defined period and range.
- Cost centreA cost centre is a location, function or activity for which costs are collected and, in responsibility accounting, a unit whose manager is primarily accountable for costs.
- Cost classificationCost classification groups costs according to a stated purpose or characteristic.
- Cost constraint on financial reportingThe cost constraint recognises that the benefits of reporting financial information should justify the costs of providing and using it.
- Cost controlCost control seeks to keep actual costs and resource use within appropriate plans or standards while achieving required output and quality.
- Cost driverA cost driver is a factor linked to the consumption or cost of an activity.
- Cost gapA cost gap is the excess of estimated or current cost over the target cost required to achieve the planned profit at a market-based price.
- Cost hierarchyA cost hierarchy groups activities by what triggers them, commonly unit-level, batch-level, product-sustaining and facility-sustaining activities.
- Cost leadershipCost leadership is a competitive strategy that seeks a sustainable cost advantage while offering a product or service acceptable to a broad target market.
- Cost model for property, plant and equipmentThe IAS 16 cost model carries an item of property, plant and equipment at cost less accumulated depreciation and accumulated impairment losses.
- Cost objectA cost object is anything for which a separate cost measurement is wanted, such as a product, service, job, customer or department.
- Cost of capitalThe return required by providers of finance for committing funds to an investment with a particular risk.
- Cost of convertible debtThe return implied by the issuer's relevant after-tax interest and expected redemption or conversion cash flows relative to debt value or net proceeds.
- Cost of debtThe effective return required on borrowing, with the company's after-tax cost reflecting usable tax relief on interest.
- Cost of equityThe return shareholders require for bearing the risk of their equity investment.
- Cost of salesCost of sales comprises costs attributable to goods sold or services supplied during the period; for a trading business, it is the cost of inventory sold.
- Cost of variable-rate debtThe effective borrowing cost on debt whose interest rate resets with a specified reference rate, usually plus a margin.
- Cost poolA cost pool groups costs associated with an activity or other defined purpose before assignment to cost objects.
- Cost reductionCost reduction seeks a sustainable decrease in the resources or expenditure needed to deliver required value.
- Cost unitA cost unit is the unit of output or service for which cost is calculated.
- Cost-plus pricingCost-plus pricing adds a stated mark-up or required profit allowance to a defined cost base.
- Cost-push inflationCost-push inflation arises when higher production costs or adverse supply conditions create upward pressure on the general price level.
- Cost-volume-profit analysisCost-volume-profit analysis models how price, activity, variable cost and fixed cost affect contribution and profit.
- Costs of disposalCosts of disposal are incremental costs directly attributable to disposing of an asset or disposal group, excluding finance costs and income tax expense.
- Costs of fulfilling a customer contract (IFRS 15)Certain contract fulfilment costs are recognised as an asset when IFRS 15’s specified criteria are met.
- Costs of obtaining a customer contract (IFRS 15)Incremental costs of obtaining a customer contract are recognised as an asset if expected to be recovered.
- CounsellingCounselling provides a supportive opportunity to explore difficulties affecting a person’s wellbeing or effectiveness.
- Counter-offer (English contract law)A proposed alternative to an offer that rejects the original offer and makes a new one.
- Creative accountingCreative accounting describes the use of accounting choices or transactions to influence how financial results are presented.
- CreditA credit is an entry on the right-hand side of a ledger account.
- Credit crunchA credit crunch is a marked tightening in the availability of lending relative to borrowers’ needs and prevailing conditions.
- Credit enhancementA contractual or structural feature intended to reduce credit losses for specified investors or obligations.
- Credit lossA credit loss is the present value of the difference between contractual cash flows due and the cash flows the entity expects to receive.
- Credit managementSetting and enforcing customer credit terms to support profitable sales while controlling non-payment and financing costs.
- Credit noteA credit note documents a reduction of an amount previously invoiced.
- Credit ratingAn opinion on credit risk assigned under a rating provider's methodology to an issuer or a specific financial obligation.
- Credit riskThe risk of loss when a borrower or counterparty fails to meet its contractual financial obligations.
- Credit spreadThe additional yield or rate over a specified reference rate used to price a debt obligation's credit and other risks.
- Credit unionA credit union is a member-owned financial cooperative providing services such as savings and lending to eligible members.
- Creditor hierarchyThe order in which different claims are entitled to payment, subject to the applicable law and contractual terms.
- CreditorsCreditors are parties to whom the business owes money.
- Critical success factorA critical success factor is an area in which the organisation must perform well to achieve its objectives in its particular environment.
- Cross exchange rateAn exchange rate between two currencies derived from their respective rates against a common third currency.
- Cross-directorshipA cross-directorship involves reciprocal board connections, commonly where directors from two companies sit on each other’s boards.
- Cross-sellingCross-selling offers an additional distinct product or service to an existing customer.
- CrowdfundingRaising funds from many contributors, commonly through an online platform, using a specified funding model.
- Crown jewelsThe assets or activities regarded as especially valuable or strategically important to a business in an acquisition context.
- Cultural artefactA cultural artefact is an observable expression of organisational culture, such as language, dress, layout, rituals or visible behaviour.
- Cultural webThe cultural web is a framework associated with Johnson and Scholes for analysing organisational culture.
- CultureCulture concerns shared meanings, assumptions, values and practices within a group.
- Currency futuresStandardised futures contracts whose underlying exposure is a specified currency exchange relationship.
- Currency of invoiceThe currency in which a commercial invoice requires payment, determining which party bears particular exchange-rate exposure.
- Currency optionAn option giving a right to exchange a specified currency amount at an agreed rate under stated exercise terms.
- Currency riskCurrency risk concerns how exchange-rate uncertainty can affect transactions, reported amounts or future economic performance.
- Currency swapAn agreement to exchange cash flows in different currencies, often including principal exchanges and periodic interest payments.
- Current account (balance of payments)The current account in the balance of payments records transactions in goods, services, primary income and secondary income between residents and non-residents.
- Current assetA current asset is expected to be realised, sold or consumed in the normal operating cycle; is held primarily for trading; is expected to be realised within twelve months; or is cash or a cash equivalent unless restricted from exchange or use to settle a liability for at least twelve months after the reporting date.
- Current audit fileA current audit file contains documentation principally relevant to the period being audited, such as current-year risk assessments, testing and conclusions.
- Current cost of a liabilityThe consideration that would be received for an equivalent liability at the measurement date, less transaction costs that would be incurred at that date.
- Current liabilityA current liability is normally settled in the operating cycle, held primarily for trading, due within twelve months, or a liability whose settlement the entity does not have a right to defer for at least twelve months at the reporting date.
- Current ratioThe current ratio compares current assets with current liabilities: current assets ÷ current liabilities.
- Current replacement costCurrent replacement cost is the amount that would currently be required to acquire an equivalent asset or service capacity.
- Current standardA current standard reflects the conditions and expectations relevant to the current period.
- Current taxCurrent tax is income tax payable or recoverable in respect of taxable profit or tax loss for a period.
- Current valueCurrent value is a measurement based on conditions at the measurement date rather than solely on the original transaction price.
- Current yieldA bond’s current yield is its annual coupon income divided by its current market price, using consistent units.
- CustomerA customer is a party that contracts to obtain goods or services that are outputs of the entity’s ordinary activities in exchange for consideration.
- Customer acquisitionCustomer acquisition attracts suitable prospects and converts them into customers.
- Customer credit limitA customer credit limit is the maximum credit exposure a business permits for a customer under its credit policy.
- Customer departmentationCustomer departmentation groups organisational activities around distinct customer groups or segments.
- Customer due diligenceCustomer due diligence gathers and assesses information about a client and relevant beneficial owners, the purpose of the relationship and associated risks.
- Customer extensionCustomer extension develops the range or depth of business with existing customers.
- Customer life cycleThe customer life cycle considers the stages and economics of a customer relationship, from acquisition and onboarding through service, retention and possible exit.
- Customer lock-inCustomer lock-in makes changing to an alternative supplier or system costly or inconvenient.
- Customer loyalty points and material rights (IFRS 15)Customer loyalty points may create a separate performance obligation when they give the customer a material right to future goods or services.
- Customer profitabilityCustomer profitability compares revenue with relevant costs of obtaining and serving a customer over the stated period or relationship.
- Customer relationship managementCustomer relationship management coordinates how an organisation understands, acquires, serves and develops relationships with customers.
- Customer retentionCustomer retention keeps existing customer relationships over a relevant period.
- Customer satisfactionCustomer satisfaction reflects customers’ assessment of how an experience meets their expectations or requirements.
- Customer statement of accountA customer statement of account lists invoices, credit notes, receipts and the balance the seller believes a customer owes at a date.
- Customer-related intangible assetA customer-related intangible asset is an identifiable intangible asset arising from customer relationships, contracts or related rights.
- Cut-off assertionCut-off concerns whether transactions are recorded in the correct accounting period.
- Cyclical unemploymentCyclical unemployment arises when weak aggregate demand reduces the demand for labour across the economic cycle.
- Cyclical variationCyclical variation is a longer-term rise and fall around a trend associated with broader cycles rather than a fixed seasonal calendar.
- Cyert and March’s behavioural theoryCyert and March’s behavioural view treats organisations as coalitions whose participants can have different objectives, limited information and negotiated expectations.
D
- DMAICDMAIC is the define, measure, analyse, improve and control cycle used in Six Sigma improvement work.
- Damages for breach of contract (English law)A monetary remedy generally intended to compensate loss caused by a breach of contract, subject to legal limits.
- Damages under the CISGCISG damages generally compensate loss caused by breach, subject to foreseeability and mitigation rules.
- Dark-pool trading venueA dark-pool trading venue provides trading without displaying the same pre-trade order information as a transparent order book.
- Data backupA data backup is a separate copy retained so information can be restored after loss or damage.
- Data miningThe exploration of data to identify potentially useful patterns or relationships.
- DebitA debit is an entry on the left-hand side of a ledger account.
- Debit noteA debit note communicates an adjustment from the issuer’s perspective.
- Debt covenantA contractual undertaking or restriction in a borrowing agreement designed to protect the lender or regulate borrower behaviour.
- Debt ratioThe debt ratio indicates how much of an asset base is financed by liabilities or debt.
- Debt-for-equity swapAn arrangement in which a creditor exchanges some or all of a debt claim for shares in the debtor.
- DecentralisationDecentralisation distributes decision authority to lower levels or units rather than retaining it centrally.
- Decision makingDecision making selects a course of action from available alternatives in pursuit of objectives.
- Decision packageA decision package describes an activity and a specified level of service for evaluation in zero-based budgeting.
- Decisional managerial rolesThe decisional category in Mintzberg’s managerial-role model covers entrepreneur, disturbance handler, resource allocator and negotiator.
- Decommissioning obligationA decommissioning obligation is a present legal or constructive obligation to dismantle an asset, remove it or restore a site.
- Deductible temporary differenceA deductible temporary difference is a temporary difference that will result in deductible amounts when the carrying amount of an asset or liability is recovered or settled.
- Deemed disposalA deemed disposal is a reduction in an investor’s ownership percentage without that investor selling its existing shares, commonly because the investee issues shares to others.
- Defensive CSR strategyA defensive CSR strategy seeks to limit the organisation’s acknowledged responsibilities and additional obligations when challenged.
- Deferred considerationDeferred consideration is consideration payable after the acquisition or transfer date, whether fixed or contingent under the agreement.
- Deferred incomeDeferred income is consideration received or recorded before the related income is earned under the applicable recognition rules.
- Deferred taxDeferred tax concerns future tax effects of temporary differences between carrying amounts and tax bases and certain unused tax losses or credits.
- Deferred tax assetA deferred tax asset is a potential future income-tax benefit from deductible temporary differences, unused tax losses or credits, subject to recognition conditions.
- Deferred tax expenseDeferred tax expense is the deferred-tax component of tax expense recognised for a period, subject to where the related item is recognised.
- Deferred tax in a business combinationDeferred tax in a business combination reflects tax consequences of differences between the recognised amounts and tax bases of acquired assets and liabilities.
- Deferred tax liabilityA deferred tax liability represents future income tax payable arising from taxable temporary differences, subject to the applicable exceptions.
- Deferred tax on development costsDeferred tax on development costs arises when the carrying amount of a recognised development asset differs from its tax base.
- Deferred tax on revaluationDeferred tax on a revaluation arises when a revalued asset’s carrying amount differs from its tax base and IAS 12 requires recognition.
- Defined benefit net liabilityA defined benefit net liability generally reflects the present value of the defined benefit obligation less the fair value of plan assets, subject to IAS 19 requirements.
- Defined benefit planA defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
- Defined contribution planA defined contribution plan is a post-employment benefit plan under which an employer pays fixed contributions and has no further legal or constructive obligation if the fund is insufficient.
- DeflationDeflation is a fall in the general price level over a period, commonly reflected in a negative inflation rate.
- Deflationary gapA deflationary gap is a shortfall of aggregate demand relative to the spending required to support full-employment output in a simplified macroeconomic model.
- DelayeringDelayering removes one or more levels from an organisation’s management hierarchy.
- DelegationDelegation assigns responsibility for work and appropriate decision-making authority to another person, within stated limits.
- DeltaThe local sensitivity of an option's value to a small change in the underlying asset's value.
- Delta hedgeA position arranged so that small movements in the underlying produce approximately offsetting value changes at the current delta.
- DemandDemand describes the quantity customers are willing and able to buy at specified prices and conditions over a period.
- Demand conditions (Porter’s Diamond)Demand conditions in Porter’s Diamond concern the nature of home-market demand and how it encourages firms to develop capabilities.
- Demand equationA straight-line demand equation commonly expresses price as P = a − bQ, where a is the model’s price intercept and b is the fall in price per additional unit of quantity.
- Demand-pull inflationDemand-pull inflation arises when aggregate demand grows strongly relative to the economy’s capacity to supply goods and services.
- DemergerA transaction separating a business into a distinct company or ownership interest under a specified distribution structure.
- DeontologyDeontology evaluates conduct through duties, rights and principles rather than judging it solely by its outcomes.
- Departmental absorption rateA departmental absorption rate assigns overhead using a separate cost-centre rate and an appropriate base for that centre.
- DepartmentationDepartmentation groups activities and people into organisational units using a chosen basis, such as function, product, geography or customer group.
- Depreciable amountDepreciable amount is an asset’s cost, or an amount substituted for cost, less its residual value; it is allocated over the asset’s useful life.
- Depreciable assetA depreciable asset has a depreciable amount allocated systematically over its useful life.
- DepreciationDepreciation systematically allocates a tangible non-current asset’s depreciable amount over its useful life.
- Depreciation methodA depreciation method allocates a depreciable asset’s amount over its useful life in a way that reflects the pattern of consumption of its expected economic benefits.
- DepressionAn economic depression is an exceptionally severe and prolonged downturn in economic activity.
- Deprival valueA measure of the loss to an entity from being deprived of an asset, commonly the lower of replacement cost and recoverable amount.
- DerecognitionDerecognition is the removal of all or part of a previously recognised asset or liability from the statement of financial position.
- Derecognition of a financial assetFinancial asset derecognition is the removal of all or part of a previously recognised financial asset under IFRS 9’s requirements.
- DerivativeA derivative is a financial instrument or other contract within IFRS 9 with specified characteristics including a value that changes in response to an underlying variable and settlement at a future date.
- Derivative financial instrumentA derivative is a financial instrument whose value changes in response to a specified underlying variable, generally requires little or no initial net investment relative to other contracts with similar responses, and is settled at a future date.
- Destroyed inventoryGoods destroyed are inventory lost through events such as fire or flooding.
- Detection riskDetection risk is the risk that audit procedures performed to reduce audit risk to an acceptably low level fail to detect an existing material misstatement.
- DevelopmentDevelopment applies research findings or other knowledge to a plan or design for new or substantially improved products or processes before commercial use.
- Development (people)People development expands an individual’s capabilities for current and future responsibilities.
- Development expenditureDevelopment expenditure is expenditure on applying research findings or other knowledge to a plan or design for new or substantially improved products or processes.
- Differentiation strategyA differentiation strategy seeks competitive advantage through attributes that target customers value and perceive as distinct.
- Digital assetA digital asset is a digitally represented item that may confer rights or economic benefits; its accounting depends on its nature and purpose.
- Diluted earnings per shareDiluted earnings per share adjusts basic EPS for the effect of dilutive potential ordinary shares.
- DilutionDilution is a reduction in a shareholder’s proportionate interest, or, in earnings per share, a reduction in EPS from assumed conversion or exercise of potential ordinary shares.
- Diminution in value (UK inheritance tax)The reduction in the transferor’s estate value caused by a disposition.
- Direct assistance by internal auditorsDirect assistance is the use of internal auditors to perform audit procedures under the external auditor’s direction, supervision and review.
- Direct assurance engagementIn a direct assurance engagement, the practitioner measures or evaluates the underlying subject matter against criteria and presents the resulting subject matter information as part of, or accompanying, the assurance report.
- Direct controlA direct control is a control sufficiently precise to prevent, or detect and correct, misstatements at the assertion level.
- Direct costA direct cost can be traced economically and in full to the particular cost object being measured, such as a product, job or department.
- Direct expenseA direct expense is a cost other than direct materials and direct labour that can be traced economically to a specific cost object.
- Direct labourDirect labour is employee effort that can be traced to a particular product, job or service.
- Direct labour budgetA direct labour budget estimates the productive labour time and remuneration required for planned output.
- Direct materialDirect material is material whose cost can be traced economically to a particular product or job.
- Direct method (cash flows)The direct method reports major classes of operating cash receipts and payments, such as cash collected from customers and cash paid to suppliers and employees.
- Direct method of multi-level consolidationThe direct method of multi-level consolidation calculates the ultimate parent’s group interests and adjustments for each controlled entity directly.
- Direct reapportionment methodThe direct reapportionment method distributes each service centre’s cost to production centres while ignoring services provided between service centres.
- Direct stakeholder claimA direct stakeholder claim is expressed by a stakeholder able to communicate its own interest or demand to the organisation.
- DirectingDirecting guides people’s work towards agreed objectives through instructions, communication, leadership and appropriate supervision.
- Directional testingDirectional testing selects the direction of testing according to the misstatement risk and assertion.
- Directly proportional relationshipTwo quantities are directly proportional when one is a constant multiple of the other.
- DirectorA director is a person holding a director’s role in an organisation’s governance framework, with responsibilities determined by applicable law and arrangements.
- Director appointment (UK company law)A company appoints a director under applicable legislation and its constitution.
- Director disqualification (UK)Disqualification restricts a person from acting as a director or participating in company management for the applicable period.
- Directors’ general duties (UK company law)Statutory duties directors owe to their company, including proper purpose, care, independent judgment and management of conflicts.
- Directors’ inductionDirectors’ induction is the structured introduction that helps newly appointed directors understand the organisation and fulfil their board responsibilities.
- Directors’ remunerationDirectors’ remuneration is the total reward provided for serving as a director, potentially including salary or fees, bonuses, share-based incentives, pension contributions and other benefits.
- Disclaimer of opinionA disclaimer of opinion is expressed when the auditor cannot obtain sufficient appropriate audit evidence and concludes that possible effects of undetected misstatements could be both material and pervasive.
- Disclosure of interestsDisclosure of interests means communicating relevant personal, financial or other connections that could affect, or appear to affect, an individual’s judgment or duties.
- DisclosuresDisclosures provide information in the primary financial statements and accompanying notes that helps users understand recognised amounts, accounting policies, estimates, risks and relevant unrecognised items.
- Discontinued operationA discontinued operation is a component of an entity that has been disposed of or is classified as held for sale and meets the specified IFRS 5 conditions, such as representing a separate major line of business or geographical area.
- DiscountA discount is a reduction from a stated amount.
- Discounted cash flow valuationA valuation method that discounts expected future cash flows at an appropriate rate and sums their present values.
- Discounted payback periodThe time needed for cumulative discounted project cash inflows to recover the initial investment.
- DiscountingConverting a future amount into its equivalent value today using a required rate of return.
- Discounting a provisionWhen the effect of the time value of money is material, a provision is measured at the present value of expected settlement expenditure.
- Discrete numerical dataDiscrete numerical data take distinct countable values rather than every value in an interval.
- Discretionary fixed costA discretionary fixed cost is set by a management policy or spending decision for the period rather than varying automatically with current output.
- Discussion paperA discussion paper is a consultation document used to explore an accounting issue and seek stakeholder feedback before detailed proposals are finalised.
- Dishonoured chequeA dishonoured cheque is a cheque that the bank refuses to pay.
- DisinflationDisinflation is a reduction in the rate of inflation.
- Dispersed leadershipDispersed leadership spreads leadership activity across people with relevant expertise rather than locating it entirely in one formal leader.
- Disposal groupA disposal group is a group of assets to be disposed of together in a single transaction, together with liabilities directly associated with those assets that will be transferred in that transaction.
- Disposal of a foreign subsidiaryDisposal of a foreign subsidiary is the sale or other disposal of an interest in an overseas subsidiary, with accounting depending on whether control is lost.
- Disposal of a group interestA disposal of a group interest is a sale or other reduction of an investor’s interest in a group entity.
- Disposal of a subsidiary in the cash flow statementCash flows from losing control of a subsidiary are presented separately as investing activities in the consolidated statement of cash flows.
- Distribution overheadDistribution overhead is indirect cost of moving finished output to customers and maintaining the related delivery function.
- DiversificationDiversification introduces new products or activities into new markets relative to the organisation’s existing position.
- Diversity policyA diversity policy sets out an organisation’s commitments and arrangements for supporting fair access, diversity and inclusion.
- DivestmentA sale or other disposal of a business, operation or asset by its owner.
- Dividend capacityThe amount a business can sustainably make available for shareholder distributions after considering investment, finance, liquidity and applicable restrictions.
- Dividend coverDividend cover compares earnings available to ordinary shareholders with ordinary dividends, often as earnings per share divided by dividend per share on a consistent basis.
- Dividend growth modelA share valuation model that discounts an indefinitely growing stream of dividends at the shareholders' required return.
- Dividend income timing (UK income tax)The allocation of UK dividend income to the tax year in which the dividend is paid.
- Dividend irrelevance theoryThe proposition that dividend policy does not affect firm value under specified perfect-market assumptions and a fixed investment policy.
- Dividend nil rate band (UK income tax)A nil-rate band for dividend income that still uses the relevant income-tax bands.
- Dividend payout ratioThe proportion of earnings distributed as dividends; the retention ratio is the proportion retained under the same definition.
- Dividend policyThe approach a company takes to distributing value to shareholders versus retaining resources for investment and financial resilience.
- Dividend yieldDividend per share expressed as a percentage of the relevant share price.
- DividendsA dividend is a distribution of profits or reserves to shareholders in their capacity as owners.
- Divisible projectAn investment that can be undertaken in a fraction of its full size, with costs and benefits changing proportionately under the modelling assumption.
- Divisional autonomyDivisional autonomy is the decision authority given to a division over matters such as pricing, sourcing, operations or investment.
- Divisional performanceDivisional performance assesses the economic results and resources of a decentralised unit, while managerial performance focuses on the decisions its manager can influence.
- Divisional structureA divisional structure groups activities around products, markets, customers or geographical areas, with divisions usually containing several business functions.
- Double entry bookkeepingDouble-entry bookkeeping records each transaction with equal total debits and credits.
- Double materialityDouble materiality considers both an entity’s material impacts on people and the environment and material sustainability-related financial effects on the entity.
- Double-loop learningDouble-loop learning questions the assumptions, objectives or decision rules behind a target rather than only adjusting actions to hit it.
- Doubtful debtA doubtful debt is a receivable whose collection is uncertain.
- Downstream supply chainThe downstream supply chain covers the activities and relationships through which an organisation’s outputs reach customers and users.
- DrawingsDrawings are cash, goods or other assets withdrawn from an unincorporated business by its owner for personal use.
- Drucker’s three management tasksDrucker described management through managing the business, managing managers, and managing workers and work.
- Dual transfer pricingDual transfer pricing records the same internal transfer at different values in the selling and buying divisions’ performance accounts.
- Due diligenceDue diligence is an investigation into relevant financial, operational, legal or other matters to assist a party considering a transaction or decision.
- Due diligence in acquisitionA structured investigation of a target and transaction to identify matters that can affect value, risk, terms and execution.
- Dumping in international tradeDumping concerns export pricing below the normal-value benchmark determined under the relevant trade framework.
- Duty of careDuty of care describes the responsibility to act with appropriate care, skill and diligence.
- Dysfunctional behaviourDysfunctional behaviour occurs when actions taken to satisfy a measure or reward system harm the organisation’s underlying objectives.
E
- E-businessE-business is the conduct of business processes through electronic systems and networks.
- EBITDAAn earnings measure before interest, tax, depreciation and amortisation, whose calculation must be checked.
- EU Takeover Bids DirectiveThe EU Takeover Bids Directive establishes a framework for takeover regulation that member states implement within its defined scope and options.
- EURIBORA benchmark for rates at which wholesale euro funds could be obtained by eligible credit institutions in the unsecured market.
- Early settlement discount appraisalEvaluating whether the benefits of earlier payment justify the discount offered or accepted.
- Early trade losses relief (UK individuals)A claim to carry qualifying early trading losses back against earlier income.
- Earnings per shareBasic earnings per share is profit or loss attributable to ordinary shareholders divided by the weighted-average number of ordinary shares outstanding during the period, with adjustments and presentation as required by IAS 33.
- Earnings yield valuationEstimating equity value by dividing maintainable ordinary-shareholder earnings by an appropriate earnings yield.
- Eco-Management and Audit SchemeThe Eco-Management and Audit Scheme is a voluntary EU scheme through which organisations evaluate, manage and improve their environmental performance.
- Eco-labelAn eco-label is a claim or mark intended to communicate an environmental characteristic of a product or service.
- Economic batch quantityEconomic batch quantity adapts the order-quantity model to inventory replenished gradually while demand continues.
- Economic currency riskThe risk that exchange-rate changes alter a business's long-term cash flows, competitiveness and value.
- Economic developmentEconomic development concerns broader improvement in living conditions, opportunities and productive capabilities over time.
- Economic environmentThe economic environment comprises conditions and developments in the economy that affect an organisation’s decisions and performance.
- Economic growthEconomic growth is an increase in an economy’s real output over time.
- Economic order quantityEconomic order quantity minimises the relevant combined ordering and holding cost under the model’s assumptions.
- Economic policyEconomic policy comprises public decisions and measures intended to influence economic conditions and objectives.
- Economic resourceAn economic resource is a right that has the potential to produce economic benefits.
- Economic risk (general)General economic risk concerns adverse consequences for objectives arising from uncertain economic conditions or policy changes.
- Economic sectorAn economic sector groups activities with similar roles in production and provision.
- Economic unionAn economic union combines extensive market integration with coordination or integration of specified economic policies.
- Economic value addedEconomic value added is an economic-profit measure commonly calculated as net operating profit after tax less a capital charge based on invested capital and the weighted average cost of capital.
- Economically inactiveEconomically inactive people are outside both employment and unemployment under the applicable labour-market definitions.
- EconomyEconomy concerns obtaining resources of the required quality and quantity at an appropriate low cost.
- Economy (economic system)An economy is a system through which people and institutions organise production, distribution and consumption of goods and services.
- EducationEducation develops broader knowledge, understanding and the ability to think and learn.
- Effect of accounting policy choicesPermitted accounting policy choices can change reported amounts and comparability even when the underlying transaction is unchanged.
- Effective financial reporting communicationEffective financial reporting communication presents material information clearly and in a way users can understand and navigate.
- Effective interest rateThe effective interest rate discounts estimated future contractual cash flows over the expected life of a financial instrument to its initial carrying amount.
- EffectivenessEffectiveness concerns the extent to which objectives or desired outcomes are achieved.
- Effector (control system)An effector in a control-system model carries out the action intended to influence the process after a comparison or decision.
- EfficiencyEfficiency concerns the relationship between resources used and outputs produced, taking account of the required quality.
- Efficiency ratiosEfficiency ratios assess how effectively a business uses resources and manages working capital.
- Efficient market hypothesisThe proposition that market prices reflect a specified set of available information, limiting consistent abnormal risk-adjusted returns from that information.
- Elements of financial statementsThe Conceptual Framework identifies assets, liabilities, equity, income and expenses as the elements of financial statements.
- Eligibility to act as auditorEligibility to act as an auditor depends on applicable law, regulation and professional requirements, which can include authorisation, qualifications, registration and independence.
- Embedded audit facilityAn embedded audit facility is audit functionality incorporated into an application to capture or identify transactions for later audit analysis.
- Embedded derivativeAn embedded derivative is a component of a hybrid contract that also contains a non-derivative host and modifies some cash flows in a manner similar to a stand-alone derivative.
- Emission allowanceAn emission allowance is a unit, generally issued under an emissions trading scheme, authorising a specified quantity of emissions for compliance purposes.
- Emotional intelligenceEmotional intelligence concerns recognising and managing emotions in oneself and relationships with others.
- Emphasis of matter paragraphAn emphasis of matter paragraph draws attention to a matter appropriately presented or disclosed in the financial statements that is fundamental to users’ understanding.
- Employee benefit in kindAn employee benefit in kind is a non-cash benefit provided through employment, such as private use of a company car or employer-provided accommodation.
- Employee benefitsEmployee benefits are all forms of consideration given by an entity in exchange for employee service or for termination of employment.
- Employee deductionsEmployee deductions are amounts withheld from gross earnings before calculating net pay.
- Employee inductionEmployee induction introduces a new employee to the organisation, the role and the people, information and working arrangements needed to begin effectively.
- Employer payroll contributionsEmployer payroll contributions are amounts the employer must pay in addition to gross employee earnings, such as employer social-insurance or pension contributions under the applicable arrangements.
- Employment Allowance (UK NIC, 2025–26)A reduction of eligible employers’ secondary Class 1 National Insurance contributions.
- Employment benefit in kind (UK income tax)A non-cash benefit from employment that may be taxable under the applicable rules.
- Employment earnings receipt basis (UK)The rule that generally assesses money earnings in the tax year they are treated as received.
- Employment status for UK taxThe classification of an engagement as employment or self-employment for tax and National Insurance purposes.
- EmpowermentEmpowerment gives employees or teams meaningful authority, information and capability to make decisions within agreed boundaries.
- Engagement acceptance and continuanceAcceptance and continuance procedures assess whether a firm can perform an engagement competently, with sufficient resources, ethical compliance and appropriate client integrity.
- Engagement letterAn engagement letter records the agreed terms of an audit or other engagement, including objectives, scope, responsibilities and the expected form of reporting.
- Engagement quality reviewAn engagement quality review is an objective evaluation by an eligible reviewer of significant judgements made by the engagement team and conclusions reached on or before the date of the engagement report.
- Engagement quality reviewerAn engagement quality reviewer is an eligible individual who objectively evaluates significant judgements and related conclusions made by an engagement team for an engagement requiring such a review.
- Enhancing qualitative characteristicsComparability, verifiability, timeliness and understandability enhance the usefulness of financial information that is relevant and faithfully represented.
- Enterprise (factor of production)Enterprise as a factor of production is the initiative and organisation involved in bringing productive resources together and undertaking business decisions and risks.
- Enterprise risk managementEnterprise risk management integrates consideration of risk across an organisation and with its strategy, objectives and performance.
- Enterprise valueThe value of the operating business attributable to its finance providers before allocating that value between their claims.
- Entity risk assessment processThe entity’s risk assessment process identifies business risks relevant to objectives, assesses their significance and likelihood, and determines how to address them.
- Entity-specific valueEntity-specific value is the present value of cash flows an entity expects from continuing use and disposal of an asset or from settling a liability.
- Entrepreneurial organisational structureAn entrepreneurial or simple organisational structure typically centres authority on an owner-manager or a small leadership group, with few formal layers and relatively informal communication.
- EntrepreneurshipEntrepreneurship involves identifying opportunities and organising resources to create value under uncertainty.
- Environmental and sustainability policiesEnvironmental and sustainability policies set out an organisation’s stated approaches to relevant environmental or sustainability matters.
- Environmental auditAn environmental audit is a systematic examination of an organisation’s environmental activities, controls, compliance or performance against defined criteria.
- Environmental contingent costAn environmental contingent cost is a possible future cost dependent on uncertain events, such as clean-up, legal claims or changes in obligations.
- Environmental cost categoriesEnvironmental costs can be analysed as conventional resource and compliance costs, potentially hidden costs embedded in overhead, contingent future costs and image or relationship costs.
- Environmental costsEnvironmental costs are costs associated with preventing, reducing or remedying environmental effects of an entity’s activities.
- Environmental footprintAn environmental footprint describes environmental pressures associated with specified activities, products or an organisation.
- Environmental hidden costA potentially hidden environmental cost is an environmental resource or activity cost embedded within broader accounts or processes rather than separately visible to decision-makers.
- Environmental impact assessmentAn environmental impact assessment evaluates the potential environmental effects of a proposed project or activity, often before a decision is made.
- Environmental management accountingEnvironmental management accounting uses physical and financial information about resource use, waste and environmental effects to support internal decisions.
- Environmental management systemAn environmental management system is a structured approach for managing an organisation’s environmental responsibilities and impacts.
- Environmental provisionAn environmental provision is a provision for a present legal or constructive obligation to remedy environmental damage or meet another environmental duty.
- Environmental reputation costEnvironmental image or relationship costs concern effects on customers, suppliers, employees, communities, investors or regulators from environmental performance.
- Environmental riskEnvironmental risk concerns uncertainties arising from an organisation’s interaction with the natural environment.
- Equal opportunitiesEqual opportunities concerns fair access to work, development and other opportunities without unjustified barriers or discriminatory treatment.
- EquityEquity is the residual interest in assets after deducting liabilities.
- Equity betaA measure of the systematic risk of shareholders' returns relative to the market, reflecting business exposure and financial gearing.
- Equity instrumentAn equity instrument is a contract evidencing a residual interest in an entity’s assets after deducting all its liabilities.
- Equity instrument grantedAn equity instrument granted is a right to an entity’s equity instrument conferred on a counterparty under a share-based payment arrangement.
- Equity methodThe equity method reports an associate as a single investment rather than combining its assets and liabilities line by line.
- Equivalent annual benefitThe constant annual net benefit equivalent in present value to a project's net benefits over its life.
- Equivalent annual costThe constant annual cost with the same present value as an asset's relevant costs over its life.
- Equivalent treatment of shareholdersEquivalent treatment requires relevant holders in equivalent circumstances to receive the treatment prescribed by the applicable governance or takeover framework.
- Equivalent unitsEquivalent units express partially completed output as an equivalent number of fully completed units for a particular cost element.
- Error of commissionAn error of commission occurs when an entry is made to the wrong account of the same type, such as charging the wrong customer while recording the correct amount.
- Error of original entryAn error of original entry occurs when the same incorrect amount is entered on both sides of a transaction.
- Error of principleAn error of principle occurs when a transaction is recorded in an account of the wrong accounting category, such as treating a capital item as an expense.
- ErrorsAccounting errors include omitted transactions, wrong amounts, incorrect accounts and entries made on the wrong side.
- Espoused valuesEspoused values are the principles and priorities an organisation explicitly states that it supports.
- Estimation uncertaintyEstimation uncertainty is the susceptibility of an accounting estimate and related disclosures to an inherent lack of precision in measurement.
- Ethical absolutismEthical absolutism holds that at least some moral requirements apply without exception.
- Ethical conceptual frameworkThe professional ethical conceptual framework provides a process for identifying, evaluating and addressing threats to compliance with fundamental ethical principles.
- Ethical dilemmaAn ethical dilemma is a situation requiring judgement because relevant ethical duties, values or stakeholder interests appear to conflict, or because it is difficult to determine the appropriate course of action.
- Ethical relativismEthical relativism treats moral judgments as dependent on a cultural, social or individual standpoint rather than on one universally valid standard.
- Ethical safeguardAn ethical safeguard is an action, individually or in combination with others, that effectively reduces an identified threat to compliance with the fundamental principles to an acceptable level.
- EthicsEthics concerns principles and reasoned judgments about appropriate conduct and its effects on others.
- EurobondAn internationally issued bond denominated in a currency outside that currency's domestic issuance market, under the relevant market convention.
- European Central BankThe European Central Bank is the institution at the centre of the Eurosystem’s euro-area monetary arrangements.
- European UnionThe European Union is a political and economic union of European member states operating through treaties and common institutions.
- EvaluationEvaluation uses evidence and reasoned judgment to assess the merits, limitations and implications of options, performance or information.
- Events after the reporting periodEvents after the reporting period are favourable or unfavourable events between the reporting date and the date the financial statements are authorised for issue.
- Exception reportingException reporting focuses management attention on deviations meeting defined significance criteria rather than listing every routine result in equal detail.
- Excess depreciationExcess depreciation is the difference between depreciation based on a revalued asset and depreciation based on its original cost.
- Exchange of property, plant and equipmentAn exchange of property, plant and equipment is a transaction in which an entity acquires an asset in exchange for a non-monetary asset or a combination of monetary and non-monetary assets.
- Exchange-rate volatilityExchange-rate volatility describes the extent of fluctuations in an exchange-rate measure over a specified interval and period.
- Exchange-traded optionAn option traded under standardised exchange contract specifications, with the exchange's clearing and settlement arrangements.
- Executive directorAn executive director is a board member who also has executive management responsibilities in the organisation.
- Executive information systemAn information system designed to support senior managers with relevant, often summarised information.
- Exempt supply (UK VAT)An exempt supply is a supply that is not taxable for VAT under the applicable exemption.
- Exemption from consolidated financial statementsAn intermediate parent can be exempt from preparing consolidated financial statements only when the applicable IFRS 10 conditions are met.
- Existence assertionThe existence assertion concerns whether assets, liabilities or equity interests recorded in financial statements exist at the relevant date.
- Expectations theory of interest ratesA theory explaining longer-term interest rates through expectations of future short-term rates under stated assumptions.
- Expected credit lossesExpected credit losses are probability-weighted credit losses arising from possible defaults over a specified period.
- Expected value approachAn expected value is a probability-weighted average of possible outcomes.
- ExpensesExpenses are decreases in assets or increases in liabilities that reduce equity, other than distributions to holders of equity claims.
- Expert powerExpert power is influence based on others’ perception that a person has relevant knowledge or skill.
- Expert witness reportAn expert witness report presents the expert’s opinions and the basis for those opinions for use in a legal or other dispute process.
- Explicit knowledgeExplicit knowledge is knowledge expressed in a form that can be recorded and communicated, such as procedures, designs, explanations or documented rules.
- Export credit protectionExport credit protection uses specified insurance or guarantee arrangements to address defined payment or financing risks in international trade.
- Export of goods from Great Britain (UK VAT)A supply of goods sent from Great Britain outside the UK that may be zero-rated if export conditions are met.
- Exposure draftAn exposure draft sets out proposed requirements or amendments for public comment before a standard setter makes final decisions.
- Exposure limitAn exposure limit sets a defined boundary for an activity or risk measure to support the organisation’s risk policy.
- Extended warrantyAn extended warranty is a warranty covering additional time or service beyond a standard assurance-type warranty.
- External confirmationAn external confirmation is audit evidence obtained as a direct written response to the auditor from a third party, in paper, electronic or other medium.
- External failure costExternal failure costs arise when defects or non-conformance affect customers after delivery.
- External stakeholderAn external stakeholder is outside the organisation, although the label’s boundaries depend on the framework.
- ExternalityAn externality is a cost or benefit of an activity affecting parties other than the decision-maker that is not fully reflected in the activity’s private price or payment.
- Extrinsic rewardAn extrinsic reward is an outcome provided externally in connection with work or performance.
F
- FIFO (first in, first out)FIFO assumes the earliest purchased or produced interchangeable inventory units are issued first.
- FIFO process costingFIFO process costing separates current-period work from work already performed in opening work in progress.
- Factor conditions (Porter’s Diamond)Factor conditions in Porter’s Diamond concern the resources and capabilities available in a location, including skills, knowledge, infrastructure and relevant physical resources.
- FactoringAn arrangement in which a specialist provides services relating to receivables, often including collection, administration, finance and sometimes agreed credit protection.
- Factors of productionFactors of production are the broad resources used to produce goods and services, conventionally grouped as land, labour, capital and enterprise.
- Fair presentationFair presentation requires financial statements to represent the effects of transactions and events faithfully in accordance with the applicable financial reporting framework.
- Fair valueFair value is a market-based exit price: the price receivable for selling an asset or payable for transferring a liability in an orderly transaction between market participants at the measurement date.
- Fair value hedgeA fair value hedge is a qualifying hedge of exposure to changes in the fair value of an eligible item attributable to a particular risk.
- Fair value hierarchyA three-level classification of inputs used in measuring fair value.
- Fair value less costs of disposalFair value less costs of disposal is the fair value of an asset or cash-generating unit less the incremental costs directly attributable to its disposal.
- Fair value of a share-based payment (IFRS 2)For IFRS 2, fair value reflects the arm’s-length exchange amount between informed, willing parties for an asset, a liability settlement or a granted equity instrument.
- Fair value of net assetsIn a business combination, fair value of identifiable net assets is the recognised fair value of identifiable assets acquired less liabilities assumed at acquisition.
- Fair value through other comprehensive incomeFair value through other comprehensive income is an IFRS 9 category that presents specified fair-value movements in other comprehensive income.
- Fair value through profit or lossFair value through profit or loss is a measurement category in which changes in a financial instrument’s fair value are recognised in profit or loss, subject to specific requirements.
- Faithful representationFaithful representation means useful financial information represents the economic substance it purports to depict.
- Familiarity threatA familiarity threat arises when a close or long-standing relationship makes a professional accountant too sympathetic to another’s interests or too accepting of their work.
- Family maintenance disposition (UK inheritance tax)A qualifying lifetime disposition for family maintenance that is not treated as a transfer of value.
- Fayol’s management functionsFayol’s traditional management functions are planning, organising, commanding, coordinating and controlling.
- Feasibility (strategy)Feasibility assesses whether an organisation can implement and sustain a strategic option with the resources and capabilities available or realistically obtainable.
- Feasible regionThe feasible region contains all combinations of decision variables satisfying every model constraint, including non-negativity.
- Federal Reserve SystemThe Federal Reserve System is the United States central-banking system, with monetary and other responsibilities under its institutional framework.
- Fee dependenceFee dependence arises when a firm or individual relies heavily on fees from one client or related clients, potentially creating self-interest or intimidation threats.
- Feedback (communication)Feedback is the receiver’s response that helps a sender assess how a message was received or understood.
- Feedback controlFeedback control compares observed results with a target or standard and uses the difference to guide corrective action.
- Feedforward controlFeedforward control anticipates future outcomes using current forecasts or leading information and takes action before an adverse result occurs.
- Fees overdueOverdue fees can create a self-interest threat if a firm becomes financially exposed to a client or if the balance resembles a loan.
- Fiedler’s contingency modelFiedler’s contingency model explains leadership effectiveness through the fit between a leader’s relatively stable orientation and the favourableness of the situation.
- Final auditFinal audit work is performed at or after the reporting-period end to obtain evidence about year-end balances, disclosures and remaining transactions, and to complete the audit.
- Finance business partneringFinance business partnering is collaboration between finance professionals and other managers to improve decisions and organisational performance.
- Finance costsFinance costs are expenses associated with financing, such as interest on borrowings.
- Finance functionThe finance function supports stewardship and decisions by providing financial information, planning and controlling resources, and managing matters such as cash and funding.
- Finance incomeFinance income is income arising from financing or financial assets, such as interest earned on a loan or deposit.
- Finance leaseA finance lease is a lessor lease that transfers substantially all risks and rewards incidental to ownership of an underlying asset.
- Financial Accounting Standards BoardThe Financial Accounting Standards Board is the US body responsible for establishing financial accounting and reporting standards for relevant US entities.
- Financial accountingFinancial accounting records and summarises an entity’s transactions and events to produce financial information, including general-purpose financial statements.
- Financial accountsFinancial accounts are the financial statements and supporting accounting information prepared to report an entity’s financial position, performance and cash flows.
- Financial acquisition synergyAn incremental financing or financial benefit attributable to combining businesses, assessed against their stand-alone alternatives.
- Financial analysisFinancial analysis examines financial statements and other relevant information to assess performance, position, liquidity and risk.
- Financial analystA financial analyst examines relevant financial and business evidence to support decisions, forecasts or recommendations.
- Financial assetA financial asset includes cash, an equity instrument of another entity, and specified contractual rights such as rights to receive cash or exchange financial instruments on potentially favourable terms.
- Financial capital (integrated reporting)Financial capital is funding available to support an organisation’s activities in the integrated-reporting context.
- Financial capital maintenanceFinancial capital maintenance treats profit as earned only when closing financial net assets exceed opening financial net assets, excluding owner contributions and distributions.
- Financial derivativeA contract whose value responds to an underlying variable such as an exchange rate, interest rate, share price or commodity price.
- Financial gearingThe extent to which a business uses debt or other fixed financing commitments relative to equity, increasing the variability of shareholders' returns.
- Financial guarantee contractA financial guarantee contract requires the issuer to make specified payments to reimburse the holder for a loss incurred because a specified debtor fails to pay when due under the terms of a debt instrument.
- Financial instrumentA financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another.
- Financial interest in an audit clientA financial interest in an audit client can create a self-interest threat to independence.
- Financial intermediaryAn institution that channels funds between savers and borrowers or otherwise facilitates financial transactions and risk allocation.
- Financial liabilityA financial liability generally includes a contractual obligation to deliver cash or another financial asset, or to exchange financial assets or liabilities on potentially unfavourable terms; specified settlement in an entity’s own equity can also qualify.
- Financial managementManaging an organisation's investment, financing, cash and distribution decisions to support its objectives.
- Financial marketA system through which participants issue, buy, sell or exchange financial claims and manage related exposures.
- Financial performance indicatorA financial performance indicator measures a monetary result or relationship, such as profit, margin, return, liquidity or gearing.
- Financial planningForecasting the financial consequences of business objectives and deciding how to obtain and use the resources required.
- Financial reconstructionA reorganisation of an entity's financing, claims or capital structure to address financial difficulties or improve sustainability.
- Financial reporting regulatory frameworkA financial reporting regulatory framework is the system of laws, standards, oversight and enforcement that governs reporting in a jurisdiction.
- Financial riskFinancial risk is exposure to potential financial loss or adverse financial outcomes, for example from credit, liquidity, market or financing conditions.
- Financial risk from gearingThe additional variability in shareholders' returns caused by fixed financing commitments such as debt interest and repayment obligations.
- Financial statement dateThe financial statement date is the date of the end of the latest period covered by the financial statements.
- Financial strategyThe coordinated approach to investment, funding, distributions and financial risk that supports an organisation's wider strategy.
- Financial volatilityFinancial volatility describes the variability of a specified financial price, return or other measured variable.
- Financial-asset business modelThe IFRS 9 business-model assessment considers how groups of financial assets are managed to generate cash flows, alongside the assets’ contractual cash-flow characteristics.
- Financial-statement auditA financial-statement audit is an independent assurance engagement in which the auditor obtains reasonable assurance and expresses an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable reporting framework.
- Financing activitiesFinancing activities change the size or composition of the entity’s contributed equity and borrowings.
- Financing decisionA decision about how to obtain and structure the funds needed for an organisation's investment and operations.
- Finished goodsFinished goods are completed products held before sale or delivery.
- Firm strategy, structure and rivalry (Porter’s Diamond)Firm strategy, structure and rivalry in Porter’s Diamond concern how a location’s business environment shapes the formation, organisation and management of firms and the nature of domestic competition.
- First-time adoption of IFRS Accounting StandardsFirst-time adoption is the preparation of an entity’s first financial statements containing an explicit and unreserved statement of compliance with IFRS Accounting Standards.
- Fiscal policyFiscal policy uses government taxation, spending and related budget decisions to influence the economy and pursue public objectives.
- Fisher relationshipThe relationship linking a nominal return, a real return and inflation: 1 + nominal rate = (1 + real rate) × (1 + inflation).
- Fixed and floating company chargesForms of security over company assets that differ in the company’s ability to deal with the charged assets.
- Fixed budgetA fixed budget is prepared for one planned activity level and is not automatically adjusted when actual activity differs.
- Fixed capital systemA fixed-capital system separates partners’ long-term capital contributions from routine movements.
- Fixed chargeA fixed charge is a security interest over identifiable assets, with restrictions and creditor rights determined by the applicable law and agreement.
- Fixed costA fixed cost remains constant in total within a stated relevant activity range and time period.
- Fixed overhead capacity varianceThe fixed overhead capacity variance values actual hours worked compared with budgeted hours at the standard fixed-overhead absorption rate.
- Fixed overhead efficiency varianceThe fixed overhead efficiency variance values standard hours for actual output compared with actual hours at the standard fixed-overhead absorption rate.
- Fixed overhead expenditure varianceThe fixed overhead expenditure variance is the difference between budgeted fixed overhead and actual fixed overhead for the period on a comparable cost scope.
- Fixed overhead total varianceUnder standard absorption costing, fixed overhead total variance compares fixed overhead absorbed for actual output with actual fixed overhead incurred.
- Fixed overhead volume varianceThe fixed overhead volume variance measures the difference between fixed production overhead absorbed for actual output and the fixed-overhead budget under a standard absorption system.
- Fixed production overheadsFixed production overheads are indirect production costs that remain relatively constant despite changes in output, such as factory rent and factory management salaries.
- Flat organisationA flat organisation has relatively few management levels between leadership and operating staff.
- Flexed budgetA flexed budget is the budget recalculated for the actual level of activity, using the relevant budgeted prices, rates and cost-behaviour assumptions.
- Flexible budgetA flexible budget describes expected revenue and costs over a range of activity levels using appropriate behaviour assumptions.
- Flexible workforceA flexible workforce allows an organisation to adjust employee availability or working arrangements to its needs.
- Floating chargeA floating charge is security over a specified class of changing assets under which the borrower may normally deal with those assets until the relevant restriction or crystallisation event.
- Flow cost accountingFlow cost accounting follows material and related system and delivery or disposal costs through an organisation to make losses visible.
- Fluctuating capital systemA fluctuating-capital system records capital contributions, profit appropriations, drawings and other partner movements in one capital account for each partner.
- Fluctuating working capitalThe additional current-asset investment required above the continuing minimum, often because of seasonal or temporary activity changes.
- Focus strategyA focus strategy targets a relatively narrow customer group, segment or geographic market and seeks advantage within it.
- ForecastA forecast is an estimate of what is expected to happen, based on available evidence and assumptions.
- Forecast and projectionA forecast is prospective financial information prepared on assumptions about future events management expects and actions it expects to take.
- Foreign currencyForeign currency is a currency other than an entity’s functional currency.
- Foreign exchange marketThe market in which participants exchange currencies or agree rates for future currency transactions.
- Foreign exchange quotationThe price of one currency expressed in units of another, with the direction and settlement basis stated.
- Foreign exchange swapA contract pairing an exchange of two currencies on one date with the reverse exchange on a later date at agreed rates.
- Foreign operationA foreign operation is a subsidiary, associate, joint arrangement or branch whose activities are based or conducted in a country or currency other than those of the reporting entity.
- Foreign-currency associate translationForeign-currency associate translation converts an equity-accounted foreign operation into the group presentation currency and recognises the resulting exchange differences as required.
- Foreign-exchange interventionForeign-exchange intervention involves an authority buying or selling currencies to influence market conditions or an exchange-rate objective.
- Forensic investigationA forensic investigation applies investigative and accounting techniques to a suspected fraud, dispute or other matter, often with attention to evidence that may be used in legal proceedings.
- Forgivable loanA forgivable loan is a loan whose lender undertakes to waive repayment under specified conditions.
- Formal groupA formal group is deliberately established within an organisation for an assigned purpose, with membership or responsibilities recognised through official arrangements.
- Formal organisationThe formal organisation is the intentionally established structure of roles, authority, responsibilities and official working relationships.
- Forming (team development)Forming is the initial stage in Tuckman’s team-development model, when members orient themselves to the task and one another.
- FormulaA formula states a relationship between quantities using symbols or expressions.
- Forum of FirmsThe Forum of Firms is an independent association of international firm networks involved or interested in transnational audits.
- Forward contractA binding agreement to buy or sell an identified underlying amount on a future date at terms agreed in advance.
- Forward exchange contractAn agreement made now to exchange specified currencies at an agreed rate on a future date or within an agreed delivery arrangement.
- Forward integrationForward integration extends an organisation’s activities towards later stages of its supply chain and its final customers.
- Forward premium or discountThe difference between a forward exchange rate and the spot rate, expressed under a stated currency quotation convention.
- Forward rate agreementAn agreement fixing a reference interest rate for a specified future borrowing or deposit period through a cash-settled difference.
- Four lines of defenceThe four-lines framework distinguishes routine controls, separate management review, internal audit and external audit.
- Four-way equivalenceA theoretical linkage among inflation differences, interest-rate differences, forward rates and expected exchange-rate changes.
- FranchisingFranchising is an arrangement in which a franchisor permits a franchisee to operate using its brand, business format or other specified rights under agreed conditions.
- FraudFraud involves an intentional act by one or more persons using deception to obtain an unjust or illegal advantage.
- Fraud risk factorA fraud risk factor is an event or condition indicating an incentive or pressure to commit fraud, or an opportunity to do so.
- Fraud triangleThe fraud triangle is a model of pressure, opportunity and rationalisation commonly used to discuss conditions associated with fraud.
- Fraudulent financial reportingFraudulent financial reporting involves intentional misstatements or omissions in financial statements to deceive users.
- Fraudulent trading (UK company law)Carrying on company business with intent to defraud creditors or for another fraudulent purpose.
- Free cash flow to equityCash available to ordinary shareholders after operating needs, taxes, reinvestment and net debt financing flows.
- Free cash flow to firmCash generated by operations after operating tax and necessary reinvestment, available to both debt and equity finance providers.
- Frictional unemploymentFrictional unemployment arises while people search for work or move between jobs, reflecting the time and information needed to match workers and vacancies.
- Full goodwill methodThe full goodwill method measures qualifying non-controlling interests at fair value at the acquisition date, so recognised goodwill includes the non-controlling interest’s share.
- Functional benchmarkingFunctional benchmarking compares a function or process with strong practice, potentially outside the organisation’s industry.
- Functional budgetA functional budget plans a particular activity or resource area, such as sales, production, materials, labour or overhead.
- Functional currencyFunctional currency is the currency of the primary economic environment in which an entity operates.
- Functional strategyA functional strategy sets the direction and major choices for a function such as marketing, operations, human resources or finance in support of wider organisational strategy.
- Functional structureA functional structure groups work by specialised functions such as operations, sales, finance and human resources.
- Fundamental breach under the CISGA breach that substantially deprives the other party of what it was entitled to expect, subject to a foreseeability exception.
- Fundamental qualitative characteristicsRelevant information and faithful representation are the two fundamental qualitative characteristics of useful financial information.
- Further processing decisionA further-processing decision compares selling an output at the split-off point with processing it further.
- Future operating lossesFuture operating losses are anticipated shortfalls from future business activities; they do not by themselves create a present obligation.
- Futures contractA standardised exchange-traded contract creating exposure to an underlying asset or rate, normally with margin and daily settlement arrangements.
G
- G20/OECD Principles of Corporate GovernanceThe G20/OECD Principles of Corporate Governance provide an international reference for policy makers and organisations on corporate governance.
- GammaThe sensitivity of an option's delta to changes in the underlying asset's value.
- Gap exposureExposure arising when interest-sensitive assets and liabilities reprice or mature at different times or in different amounts.
- Gearing ratioGearing measures the use of debt finance relative to equity or total long-term finance.
- General Anti-Abuse Rule (UK tax)A UK rule designed to counteract tax advantages from abusive tax arrangements within its statutory scope.
- General IT controlsGeneral IT controls support the continued proper operation of applications and the integrity of information processing.
- General ledgerThe general ledger contains the accounts used to classify and summarise the entity’s transactions and balances.
- General purpose financial statementsFinancial statements prepared for users who cannot require an entity to supply reports tailored to their information needs.
- Generally accepted accounting principlesGenerally accepted accounting principles are the accounting requirements and practices used in a particular reporting framework or jurisdiction.
- Gift Aid (UK)Gift Aid is a UK scheme under which qualifying charitable donations receive income-tax relief.
- Gift hold-over relief for business assets (UK)A relief that can defer a qualifying gift gain by reducing the recipient’s acquisition cost.
- Gifts and hospitalityA gift or hospitality from a client can create self-interest, familiarity or intimidation threats to professional behaviour and independence.
- Gilt and qualifying corporate bond CGT exemption (UK individual)An exemption from capital gains tax for qualifying gilt-edged securities and qualifying corporate bonds.
- Global Reporting InitiativeThe Global Reporting Initiative develops standards used by organisations to report information about their impacts on the economy, environment and people.
- Global product structureA global product structure groups international operations into product divisions with responsibility across countries.
- GlobalisationGlobalisation is increasing cross-border integration of markets, production, finance, knowledge and other activities.
- Goal congruenceGoal congruence exists when managers’ and employees’ decisions that serve their own objectives also support the organisation’s goals.
- Going concernGoing concern assumes an entity will continue operating for the foreseeable future rather than liquidating or ceasing trading.
- Going concern audit assessmentThe auditor evaluates management’s use of the going concern basis and the related assessment, considering evidence about events or conditions and disclosures.
- Going privateGoing private is a transaction or process through which a publicly traded business moves into private ownership and ends the relevant public-market status.
- Golden fleece (public sector matrix)A golden fleece is a service with a strong ability to deliver effectively but low public or political support or funding attractiveness in the public sector portfolio matrix.
- Golden-parachute arrangementA golden-parachute arrangement provides specified executive benefits associated with a change of control and any additional contractual triggers.
- GoodsGoods are products used or exchanged to satisfy needs and wants; they are often tangible, although digital goods can be intangible.
- Goods despatched noteA goods despatched note records goods sent to a customer, typically their quantities and description.
- Goods in transitGoods in transit are goods being transported between parties or locations at a reporting date.
- Goods received notesA goods received note records goods delivered to a business.
- Goods written offWriting off goods removes inventory whose carrying amount is no longer recoverable, such as destroyed, missing or completely obsolete items.
- GoodwillGoodwill in a business combination is the excess of acquisition consideration plus non-controlling interest, and any previously held interest where relevant, over the acquisition-date fair value of identifiable net assets.
- Goodwill adjustment on partner admissionA goodwill adjustment on admission protects or reallocates the existing partners’ interests when a new partner joins.
- GovernanceGovernance is the system by which an organisation is directed and controlled.
- Governance differencesGovernance differences arise because organisations operate with different ownership, purposes, sizes, legal settings and stakeholder relationships.
- Government agencyA government agency is a public organisation assigned particular functions, such as administering a service, collecting information or implementing and enforcing specified rules.
- Government assistance for businessGovernment assistance comprises public measures that provide resources, services or other support to eligible businesses.
- Government bondA debt security issued by a government under specified currency, maturity and payment terms.
- Government grantA government grant is assistance by government in the form of a transfer of resources to an entity in return for past or future compliance with conditions related to its operating activities, subject to the applicable definition and exclusions.
- Grant dateGrant date is the date on which the entity and counterparty agree to a share-based payment arrangement and have a shared understanding of its terms and conditions.
- Grant financeFunding supplied for a stated purpose that is not ordinarily repayable if the recipient satisfies the relevant conditions.
- Grant for a non-depreciable assetA grant for a non-depreciable asset is an asset-related grant associated with an asset that is not depreciated, such as land with an unlimited useful life.
- Grant related to an assetA grant related to an asset is a government grant whose primary condition is that the recipient purchase, construct or otherwise acquire a long-term asset.
- Grant related to incomeA grant related to income is a government grant other than a grant related to an asset.
- Green budgetingGreen budgeting incorporates environmental or sustainability objectives into resource plans and budget decisions.
- Green financeFinance raised or provided to support activities with intended environmental benefits, under specified terms and criteria.
- Gross domestic productGross domestic product measures the value of production within an economy over a period, using national-accounts rules that avoid counting intermediate production repeatedly.
- Gross national incomeGross national income measures the income accruing to an economy’s residents, including net primary income from abroad, using national-accounts definitions.
- Gross payGross pay is an employee’s earnings before deductions.
- Gross profitGross profit is revenue less cost of sales.
- Gross profit marginGross profit margin expresses gross profit as a percentage of revenue: gross profit ÷ revenue × 100%.
- GroupA group consists of a parent and its subsidiaries.
- Group (people)A group in an organisational-behaviour context consists of people who interact and recognise some shared identity, interest or connection.
- Group auditA group audit is an audit of group financial statements that includes the financial information of more than one entity or business unit.
- Group audit componentA component is an entity, business unit, function, business activity or combination determined by the group auditor for planning and performing audit procedures in a group audit.
- Group bonus schemeA group bonus scheme links a bonus pool to team performance and distributes it using an agreed basis, such as hours, basic pay or equal shares.
- Group engagement teamThe group engagement team directs, supervises and reviews the group audit and retains responsibility for the group auditor’s opinion.
- Group normsGroup norms are shared expectations about acceptable behaviour within a group.
- Group relief (UK corporation tax)Relief allowing eligible company losses or other surrenderable amounts to be used against another qualifying company’s profits.
- Group reorganisationA group reorganisation changes the ownership or legal structure of entities within or around a group.
- Group-wide controlsGroup-wide controls are controls designed and operated across a group, such as common financial reporting policies or central monitoring of consolidation entries.
- GroupthinkGroupthink occurs when pressure for agreement or cohesion weakens a group’s critical evaluation of its decisions.
- Growth rateA growth rate measures the change in a specified quantity relative to a stated base over a defined period.
- Guaranteed minimum earningsGuaranteed minimum earnings in a remuneration scheme are the contractual floor payable even when calculated piecework or bonus-based earnings would be lower.
H
- HMRC compliance check (UK tax)An enquiry by HMRC into a taxpayer’s tax position or return.
- Hamblin’s training evaluation modelHamblin’s training evaluation model examines reactions, learning, job behaviour, organisational effects and ultimate value.
- Hampel ReportThe Hampel Report was a 1998 UK corporate-governance review of the earlier Cadbury and Greenbury recommendations.
- Handy’s cultural typesHandy’s cultural typology describes power, role, task and person cultures.
- Hard capital rationingA limit on investment finance arising from external constraints on an organisation's access to capital.
- Hard currencyHard currency is a contextual description of a currency regarded as relatively stable, liquid and widely acceptable for international use.
- Harmon’s process-strategy matrixHarmon’s process-strategy matrix helps identify an appropriate approach to a business process by considering its strategic importance and its complexity and dynamism.
- Hawthorne studiesThe Hawthorne studies were a series of workplace investigations associated with Mayo, Roethlisberger and others at Western Electric’s Hawthorne Works.
- Health and safety riskHealth and safety risk concerns the likelihood and consequences of harm to people from hazards associated with work or other relevant activities.
- Hedge accountingHedge accounting is an accounting approach that, where qualifying criteria are met, reflects the effects of risk management relationships between eligible hedging instruments and hedged items.
- Hedge of a net investment in a foreign operationA net investment hedge is a qualifying hedge of foreign currency exposure arising from an investment in a foreign operation.
- Hedged itemA hedged item is an eligible exposure designated as being hedged in an accounting hedging relationship.
- HedgingAn action designed to reduce a specified exposure to an adverse change in a financial or other risk factor.
- Hedging instrumentA hedging instrument is an eligible designated instrument whose changes in fair value or cash flows are expected to offset changes in an eligible hedged item.
- Held for tradingA financial asset or liability is held for trading if it is acquired or incurred principally for near-term sale or repurchase, or otherwise meets IFRS 9’s held-for-trading criteria.
- Held-for-sale classificationHeld-for-sale classification applies when a qualifying asset or disposal group will be recovered principally through sale rather than continuing use.
- Held-for-sale disposal group with a revalued assetA disposal group may contain an asset previously measured under a revaluation model, requiring attention to both its prior measurement and held-for-sale accounting.
- Herzberg’s two-factor theoryHerzberg’s two-factor theory distinguishes hygiene factors associated with dissatisfaction from motivators associated with satisfaction through the work itself.
- High Income Child Benefit Charge (UK, 2025–26)A tax charge that can recover Child Benefit where adjusted net income exceeds the threshold.
- High day-rate systemA high day-rate system pays an enhanced time-based wage in return for agreed performance expectations or working arrangements.
- High-low methodThe high-low method estimates a linear cost equation from the observations with the highest and lowest activity levels.
- High-yield bondA bond rated below investment grade or otherwise considered to have relatively high credit risk and usually offering a higher yield.
- HistogramA histogram displays the distribution of numerical observations across intervals.
- Historical costHistorical cost measures an item using the transaction that originally gave rise to it, adjusted subsequently as the relevant standard requires.
- Hofstede’s cultural dimensionsHofstede’s cultural dimensions compare patterns of national cultural values rather than classify each individual’s personality.
- Holding costHolding cost is the relevant cost of keeping inventory over time, including applicable storage, insurance, deterioration and finance or opportunity cost of tied-up resources.
- Hollow organisationA hollow organisation concentrates on selected core activities and outsources many other activities to external providers.
- Honey and Mumford’s learning preferencesHoney and Mumford’s model describes activist, reflector, theorist and pragmatist learning preferences.
- Hopwood’s management stylesHopwood’s framework distinguishes budget-constrained, profit-conscious and non-accounting approaches to evaluating managers.
- Horizontal integrationHorizontal integration combines activities at the same stage of a value chain, commonly through acquiring or merging with a competitor.
- Hostile takeoverAn acquisition bid pursued without the support of the target company's board.
- Hot file reviewA hot file review is a review of engagement work before the report is issued.
- Human capitalHuman capital concerns people’s capabilities, experience and capacity to contribute in integrated reporting.
- Human resource managementHuman resource management concerns how an organisation obtains, develops, supports and manages its people to meet objectives responsibly.
- Human resources departmentA human resources department is a specialist organisational unit supporting people-related policies, processes and advice.
- Hybrid organisational structureA hybrid organisational structure combines features of two or more structural forms.
- Hygiene factorsHygiene factors are aspects of the work context in Herzberg’s two-factor theory whose inadequacy can create dissatisfaction.
I
- IAS 1 Presentation of Financial StatementsIAS 1 governs financial statement presentation for periods where it remains applicable. It is a legacy reference for ACCA FA September 2026–June 2027, which examines IFRS 18.
- IAS 10 Events after the Reporting PeriodIAS 10 addresses events between the reporting date and the date financial statements are authorised for issue.
- IAS 12 Income TaxesIAS 12 prescribes accounting for current and deferred income tax.
- IAS 16 Property, Plant and EquipmentIAS 16 sets requirements for recognising, measuring, depreciating and derecognising property, plant and equipment.
- IAS 19 Employee BenefitsIAS 19 prescribes accounting and disclosure for employee benefits, including short-term, post-employment, other long-term and termination benefits.
- IAS 2 InventoriesIAS 2 requires inventories to be measured at the lower of cost and net realisable value and sets rules for determining and recognising those amounts.
- IAS 20 Accounting for Government Grants and Disclosure of Government AssistanceIAS 20 prescribes accounting for government grants and disclosure of other government assistance.
- IAS 21 The Effects of Changes in Foreign Exchange RatesIAS 21 governs reporting of foreign-currency transactions and translation of financial statements into a presentation currency.
- IAS 23 Borrowing CostsIAS 23 requires directly attributable borrowing costs to be capitalised as part of a qualifying asset’s cost.
- IAS 24 Related Party DisclosuresIAS 24 requires disclosure of specified related-party relationships, transactions and outstanding balances.
- IAS 27 Separate Financial StatementsIAS 27 addresses separate financial statements, in which investments in subsidiaries, associates and joint ventures are shown as investments rather than consolidated underlying assets and liabilities.
- IAS 28 Investments in Associates and Joint VenturesIAS 28 addresses investments in associates and joint ventures, including application of the equity method.
- IAS 32 Financial Instruments: PresentationIAS 32 sets principles for presenting financial instruments as financial assets, financial liabilities or equity, and for offsetting qualifying financial assets and liabilities.
- IAS 33 Earnings per ShareIAS 33 prescribes principles for calculating and presenting basic and diluted earnings per share for entities within its scope.
- IAS 34 Interim Financial ReportingIAS 34 specifies minimum content and recognition and measurement principles for an interim financial report described as complying with IFRS.
- IAS 36 Impairment of AssetsIAS 36 sets procedures for testing assets for impairment and accounting for impairment losses and reversals.
- IAS 37 Provisions, Contingent Liabilities and Contingent AssetsIAS 37 sets requirements for recognising and measuring provisions and for disclosing contingent liabilities and contingent assets.
- IAS 38 Intangible AssetsIAS 38 deals with identifiable non-monetary assets without physical substance, such as qualifying software, licences and development assets.
- IAS 40 Investment PropertyIAS 40 prescribes accounting for investment property, meaning qualifying land or buildings held to earn rentals or for capital appreciation, or both.
- IAS 41 AgricultureIAS 41 prescribes accounting for biological assets and agricultural produce at the point of harvest within its scope.
- IAS 7 Statement of Cash FlowsIAS 7 governs statements of cash flows, classifying cash movements as operating, investing or financing activities and reconciling cash and cash equivalents.
- IAS 8 Basis of Preparation of Financial StatementsIAS 8 addresses the basis of preparing financial statements, accounting policies, changes in estimates and correction of errors.
- IASB Disclosure InitiativeThe IASB Disclosure Initiative is a set of projects aimed at making disclosures in financial statements more useful and effective.
- ICGN Global Governance PrinciplesThe ICGN Global Governance Principles set out an international investor perspective on effective corporate governance.
- IFRS 10 Consolidated Financial StatementsIFRS 10 establishes a control-based model for consolidated financial statements.
- IFRS 13 Fair Value MeasurementIFRS 13 defines fair value, establishes a measurement framework and requires disclosures when another standard requires or permits fair value.
- IFRS 15 Revenue from Contracts with CustomersIFRS 15 provides a customer-contract revenue model: identify the contract, identify its performance obligations, determine the transaction price, allocate that price and recognise revenue when or as obligations are satisfied.
- IFRS 18 Presentation and Disclosure in Financial StatementsIFRS 18 establishes presentation and disclosure requirements for financial statements, including categories and specified subtotals in profit or loss.
- IFRS 19 Subsidiaries without Public Accountability: DisclosuresIFRS 19 permits eligible subsidiaries to use reduced disclosures while applying the recognition and measurement requirements of other IFRS Accounting Standards.
- IFRS 3 Business CombinationsIFRS 3 sets requirements for accounting for a business combination using the acquisition method.
- IFRS 5 Non-current Assets Held for Sale and Discontinued OperationsIFRS 5 addresses classification, measurement and presentation of non-current assets and disposal groups held for sale, and discontinued operations.
- IFRS 7 Financial Instruments: DisclosuresIFRS 7 requires disclosures that enable users to evaluate the significance of financial instruments and the nature and extent of related risks.
- IFRS 9 Financial InstrumentsIFRS 9 prescribes recognition, classification, measurement, impairment and derecognition requirements for financial instruments, as well as hedge-accounting requirements.
- IFRS Accounting StandardsIFRS Accounting Standards are financial reporting requirements issued by the IASB and include standards labelled IFRS and still-applicable IAS, together with relevant interpretations.
- IFRS Advisory CouncilThe IFRS Advisory Council provides strategic advice to the IFRS Foundation Trustees and the standard-setting boards.
- IFRS FoundationThe IFRS Foundation is the organisation responsible for the institutional framework supporting international accounting and sustainability disclosure standards.
- IFRS InterpretationAn IFRS Interpretation provides authoritative interpretation of the application of IFRS Accounting Standards to specified issues.
- IFRS Interpretations CommitteeThe IFRS Interpretations Committee works with the IASB to support consistent application of IFRS Accounting Standards.
- IFRS S1 General Requirements for Disclosure of Sustainability-related Financial InformationIFRS S1 sets general requirements for disclosing material information about sustainability-related risks and opportunities that could reasonably affect an entity’s prospects.
- IFRS S1 sustainability materialityInformation about sustainability-related risks and opportunities is material under IFRS S1 if omitting, misstating or obscuring it could reasonably be expected to influence primary users’ decisions.
- IFRS S2 Climate-related DisclosuresIFRS S2 requires material information about climate-related risks and opportunities useful to primary users in assessing an entity’s prospects.
- IFRS for SMEs Accounting StandardThe IFRS for SMEs Accounting Standard is a simplified accounting standard intended for eligible entities without public accountability that publish general-purpose financial statements for external users.
- IIA Three Lines ModelThe IIA Three Lines Model distinguishes operational management, specialist risk-related support and challenge, and independent internal-audit assurance and advice.
- ISA 200 — Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on AuditingISA 200 addresses the overall objectives of obtaining reasonable assurance and reporting on the financial statements in accordance with the auditor’s findings.
- ISA 210 — Agreeing the Terms of Audit EngagementsISA 210 addresses audit preconditions and the agreement of engagement terms.
- ISA 220 (Revised) — Quality Management for an Audit of Financial StatementsISA 220 (Revised) addresses the engagement partner’s responsibility for managing and achieving quality at the audit engagement level.
- ISA 230 — Audit DocumentationISA 230 addresses the form, content and extent of audit documentation.
- ISA 240 (Revised) — The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial StatementsISA 240 (Revised) addresses auditor responsibilities relating to fraud risk, responses and communication.
- ISA 250 (Revised) — Consideration of Laws and Regulations in an Audit of Financial StatementsISA 250 (Revised) addresses the auditor’s responsibilities relating to laws and regulations in a financial-statement audit.
- ISA 260 (Revised) — Communication with Those Charged with GovernanceISA 260 (Revised) addresses communication between the auditor and those charged with governance.
- ISA 265 — Communicating Deficiencies in Internal Control to Those Charged with Governance and ManagementISA 265 addresses communication of relevant control deficiencies identified during the audit.
- ISA 300 — Planning an Audit of Financial StatementsISA 300 addresses establishing the overall audit strategy and developing an audit plan.
- ISA 315 (Revised 2019) — Identifying and Assessing the Risks of Material MisstatementISA 315 (Revised 2019) addresses risk assessment through understanding the entity, its environment and its system of internal control.
- ISA 320 — Materiality in Planning and Performing an AuditISA 320 addresses the auditor’s use of materiality and performance materiality.
- ISA 330 — The Auditor’s Responses to Assessed RisksISA 330 addresses designing and implementing audit responses to assessed risks of material misstatement.
- ISA 402 — Audit Considerations Relating to an Entity Using a Service OrganisationISA 402 addresses audit considerations where a user entity uses a service organisation.
- ISA 450 — Evaluation of Misstatements Identified during the AuditISA 450 addresses accumulating and evaluating identified misstatements and their effect.
- ISA 500 — Audit EvidenceISA 500 addresses the auditor’s responsibility to design and perform procedures to obtain sufficient appropriate audit evidence.
- ISA 501 — Audit Evidence—Specific Considerations for Selected ItemsISA 501 addresses specific evidence considerations for inventory, litigation and claims, and segment information.
- ISA 505 — External ConfirmationsISA 505 addresses external confirmation procedures under the auditor’s control.
- ISA 510 — Initial Audit Engagements—Opening BalancesISA 510 addresses opening balances when carrying out an initial audit engagement.
- ISA 520 — Analytical ProceduresISA 520 addresses substantive analytical procedures and the overall analytical review near the end of the audit.
- ISA 530 — Audit SamplingISA 530 addresses audit sampling to provide a basis for conclusions about the population.
- ISA 540 (Revised) — Auditing Accounting Estimates and Related DisclosuresISA 540 (Revised) addresses the audit of accounting estimates and related disclosures, including estimation uncertainty and management bias.
- ISA 550 — Related PartiesISA 550 addresses audit responsibilities regarding related-party relationships and transactions.
- ISA 560 — Subsequent EventsISA 560 addresses auditor responsibilities relating to events after the financial-statement date and facts learned after the report date.
- ISA 570 (Revised 2024) — Going ConcernISA 570 (Revised 2024) addresses audit work and reporting in relation to management’s going-concern assessment.
- ISA 580 — Written RepresentationsISA 580 addresses the auditor’s responsibility to obtain and evaluate written representations.
- ISA 600 (Revised) — Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors)ISA 600 (Revised) addresses risk-based group audit planning, performance and work with component auditors.
- ISA 610 (Revised 2013) — Using the Work of Internal AuditorsISA 610 (Revised 2013) addresses how the external auditor evaluates and uses relevant work of internal audit, subject to applicable requirements.
- ISA 620 — Using the Work of an Auditor’s ExpertISA 620 addresses the auditor’s evaluation and use of an expert’s work in a field other than accounting or auditing.
- ISA 700 (Revised) — Forming an Opinion and Reporting on Financial StatementsISA 700 (Revised) addresses forming an opinion and reporting on the financial statements.
- ISA 701 — Communicating Key Audit Matters in the Independent Auditor’s ReportISA 701 addresses determining and communicating key audit matters where applicable.
- ISA 705 (Revised) — Modifications to the Opinion in the Independent Auditor’s ReportISA 705 (Revised) addresses modified audit opinions when misstatement or insufficient evidence requires them.
- ISA 706 (Revised) — Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s ReportISA 706 (Revised) addresses additional paragraphs drawing attention to appropriate matters without replacing a required opinion modification.
- ISA 710 — Comparative Information—Corresponding Figures and Comparative Financial StatementsISA 710 addresses the auditor’s responsibilities concerning comparative information.
- ISA 720 (Revised) — The Auditor’s Responsibilities Relating to Other InformationISA 720 (Revised) addresses the auditor’s responsibilities for other information included in an annual report.
- ISA for Less Complex EntitiesThe ISA for LCE is a separate, proportionate auditing standard for eligible audits of less complex entities.
- ISAE 3400 — The Examination of Prospective Financial InformationISAE 3400 addresses engagements to examine prospective financial information, including the assumptions on which the information is based and the presentation and reporting of the examination.
- ISOISO is an international standards-development organisation.
- ISO 14000 familyThe ISO 14000 family comprises standards concerning environmental management.
- ISO 14001ISO 14001 specifies requirements for an environmental management system.
- ISQM 1 system of quality managementISQM 1 requires a firm to design, implement and operate a risk-based system of quality management for its relevant engagements.
- ISRE 2410 — Review of Interim Financial InformationISRE 2410 addresses a review of interim financial information performed by the independent auditor of the entity.
- ISRS 4400 (Revised) — Agreed-Upon Procedures EngagementsISRS 4400 (Revised) addresses requirements for agreed-upon procedures and reporting factual findings without assurance.
- ISRS 4410 (Revised) — Compilation EngagementsISRS 4410 (Revised) addresses requirements for a practitioner assisting in preparing and presenting financial information without assurance.
- ISSA 5000 — General Requirements for Sustainability Assurance EngagementsISSA 5000 addresses general requirements for limited and reasonable assurance on sustainability information.
- Ideal standardAn ideal standard assumes perfect operating conditions with no avoidable waste, idle time or inefficiency.
- Identifiability of an intangible assetAn intangible asset is identifiable if it is separable or arises from contractual or other legal rights.
- Idle timeIdle time is paid time during which employees are not producing output.
- IjaraA lease arrangement in which a provider owns an asset and permits a customer to use it for agreed payments.
- Illegitimate stakeholder claimAn illegitimate stakeholder claim is a claim judged invalid or inappropriate under the criteria being applied.
- Immediate family under the IESBA CodeFor purposes of the IESBA Code, immediate family means a spouse or equivalent, or a dependent.
- ImpairmentImpairment is a reduction in an asset’s carrying amount when the applicable recoverability test shows that the amount cannot be supported.
- Impairment indicatorAn impairment indicator is information suggesting that an asset’s carrying amount may exceed its recoverable amount.
- Impairment of an equity-accounted investmentAn equity-accounted investment is assessed for impairment as a single asset when applicable requirements indicate impairment.
- Impairment of development costsImpairment occurs when a capitalised development asset’s carrying amount exceeds its recoverable amount.
- Import embargoAn import embargo prohibits specified imports under the relevant public restrictions.
- Import quotaAn import quota limits the quantity or value of covered imports during a defined period.
- Imprest systemAn imprest system maintains petty cash at an authorised fixed amount.
- Improvements to IFRS Accounting StandardsImprovements to IFRS Accounting Standards are amendments made through the standard-setting process to address identified reporting issues.
- Inbound logisticsInbound logistics manages receipt, storage and handling of inputs needed by an organisation.
- Incentive schemeAn incentive scheme links some remuneration to an agreed performance measure, such as acceptable output, time saved, team results or profit.
- IncomeIncome comprises increases in assets or decreases in liabilities that increase equity, other than contributions from holders of equity claims.
- Income taxIncome tax is tax based on taxable profits under the relevant jurisdiction’s rules.
- Income tax (UK)Income tax is a tax on income, subject to applicable exemptions, allowances and reliefs.
- Income tax income categories (UK)The categories used to organise taxable income and apply the relevant income-tax rates and bands.
- Incomplete recordsIncomplete-records accounting reconstructs missing figures from available evidence, such as cash records, opening and closing balances, control accounts and known margins.
- Incoterms 2020Incoterms 2020 are ICC trade rules that allocate specified delivery obligations, risks and costs between seller and buyer.
- Incremental budgetingIncremental budgeting starts with a previous budget or actual result and adjusts for expected changes such as activity, prices or specific initiatives.
- Incremental costIncremental cost is the additional cost caused by choosing one option rather than the specified alternative.
- Incremental revenueIncremental revenue is the change in total revenue caused by choosing one course of action rather than another.
- IndependenceAuditor independence comprises independence of mind and independence in appearance.
- Independence in appearanceIndependence in appearance is the avoidance of facts and circumstances so significant that a reasonable and informed third party would likely conclude the firm’s or team’s integrity, objectivity or scepticism has been compromised.
- Independence in mindIndependence of mind is the state of mind that permits a conclusion without influences compromising professional judgement, allowing integrity, objectivity and professional scepticism.
- Independent directorAn independent director is assessed as able to exercise objective judgement without relationships or circumstances that compromise independence under the applicable governance criteria.
- Indirect controlAn indirect control supports the operation of other controls rather than directly preventing, or detecting and correcting, an assertion-level misstatement.
- Indirect costAn indirect cost cannot be traced economically and in full to the cost object being measured.
- Indirect labourIndirect labour supports a cost object but cannot be traced economically to individual units or jobs.
- Indirect method (cash flows)The indirect method reconciles an appropriate profit subtotal to operating cash flows.
- Indirect stakeholder claimAn indirect stakeholder claim concerns a stakeholder unable to express its own interest effectively to the organisation.
- Individual Savings Account (UK tax)A qualifying savings or investment account whose eligible income and gains are generally tax-free.
- Individual bonus schemeAn individual bonus scheme links extra pay to a particular employee’s measured performance.
- Individualism and collectivismIndividualism and collectivism concern the relative emphasis on individual autonomy and personal ties versus strong group membership and obligations in Hofstede’s framework.
- Indivisible projectAn investment that must be accepted or rejected as a whole rather than undertaken in a proportional fraction.
- Indulgence and restraint (Hofstede)Indulgence and restraint form a later dimension of Hofstede’s national-culture model concerning the extent to which gratification and enjoyment are permitted or regulated by social norms.
- Infant-industry protection argumentThe infant-industry argument proposes temporary support for an emerging activity that may become competitive after learning or scale development.
- InflationInflation is an increase in the general price level over a period, reducing the purchasing power of money.
- Inflation in financial reportingInflation is a general increase in prices that can affect the purchasing power and comparability of financial amounts over time.
- Inflationary gapAn inflationary gap is the excess of planned aggregate expenditure over the expenditure needed to buy full-employment output at the existing price level in a simplified macroeconomic model.
- Informal groupAn informal group develops through personal relationships, shared interests or social interaction rather than solely through an official organisational assignment.
- Informal organisationThe informal organisation consists of relationships, influence and patterns of communication that develop outside formally prescribed roles and procedures.
- Information asymmetryInformation asymmetry exists when parties to a relationship have different relevant information.
- Information system and communicationThe information system relevant to financial reporting includes how information is initiated, recorded, processed, corrected and reported, and how responsibilities and significant matters are communicated.
- Inherent riskInherent risk is the susceptibility of an assertion about a transaction class, account balance or disclosure to a potentially material misstatement before consideration of related controls.
- Inheritance tax (UK)A UK tax that can apply to an individual’s estate on death and certain lifetime transfers.
- Inheritance tax payment due date (UK)The date by which inheritance tax on a chargeable transfer is generally payable.
- Initial audit engagementAn initial audit engagement is one in which the prior period’s financial statements were not audited or were audited by a predecessor auditor.
- Initial direct costs of a leaseInitial direct costs of a lease are incremental costs of obtaining the lease that would not have been incurred if the lease had not been obtained, subject to IFRS 16 definitions and exclusions.
- Initial public offeringThe first public offering of a company's shares, which may involve newly issued shares, sales by existing owners, or both.
- Innominate contract term (English law)A term whose breach permits common-law termination for that breach when its consequences are sufficiently serious.
- Input VATVAT incurred on business purchases and expenses, subject to recovery rules.
- Input controlAn input control checks information before or as it enters a system to help prevent or detect invalid, incomplete or unauthorised data.
- Input sales taxInput sales tax is tax charged on purchases.
- Input validationInput validation checks whether data meets specified rules before it is accepted or processed.
- Input-output analysisEnvironmental input-output analysis compares physical resources entering a process with useful output, waste and other exits, allowing for stock changes and measurement units.
- InquiryInquiry seeks information from knowledgeable persons within or outside the entity.
- Insider dealingInsider dealing generally concerns prohibited trading or other conduct involving material non-public information, as defined by applicable law.
- Insider-dominated governanceInsider-dominated governance describes arrangements in which ownership or effective control is concentrated among a relatively small group with close connections to the organisation.
- InsolvencyInsolvency concerns a person or entity’s inability to meet obligations under the relevant legal tests, which may include inability to pay debts when due or balance-sheet conditions.
- InspectionInspection examines records, documents or tangible assets to obtain audit evidence.
- Institutional investorAn institutional investor is an organisation that invests funds on a substantial or organised basis, such as a pension fund, insurer or collective investment fund.
- Instrumental stakeholder viewAn instrumental stakeholder view considers how stakeholder relationships contribute to organisational objectives and outcomes.
- Insurance claimAn insurance claim is a request for compensation under an insurance policy after an event covered by its terms.
- Intangible assetAn intangible asset is an identifiable non-monetary asset without physical substance.
- Intangible asset acquired in a business combinationAn identifiable intangible asset acquired in a business combination is recognised separately from goodwill when the acquisition accounting criteria are met.
- Integrated reportAn integrated report explains how an organisation’s strategy, governance, performance and prospects interact to create, preserve or erode value over time.
- Integrated reportingIntegrated reporting is a reporting process founded on integrated thinking that produces communication about an organisation’s value creation over time.
- Integrated reporting content elementsThe content elements organise the matters an integrated report addresses: organisational overview and external environment, governance, business model, risks and opportunities, strategy and resource allocation, performance, outlook, and basis of preparation and presentation.
- Integrated reporting guiding principlesThe guiding principles shape how an integrated report communicates its value story: strategic focus and future orientation, connectivity, stakeholder relationships, materiality, conciseness, reliability and completeness, and consistency and comparability.
- Integrated test facilityAn integrated test facility uses test transactions or a fictitious test entity within an operating system to observe how programmed processing handles them.
- Integrated thinkingIntegrated thinking considers connections between organisational activities, resources, relationships and effects when making decisions.
- IntegrityIntegrity requires a professional accountant to be straightforward and honest in professional and business relationships.
- Integrity-based ethical approachAn integrity-based ethical approach develops shared values, responsible judgment and commitment to appropriate conduct.
- Intellectual capital (integrated reporting)Intellectual capital comprises organisational knowledge-based resources in the integrated-reporting context.
- Intelligence (human cognitive ability)Intelligence concerns cognitive capabilities involved in learning, reasoning, understanding and dealing with problems.
- Intelligence testAn intelligence test is a structured assessment intended to measure aspects of cognitive ability.
- Intended users of assuranceIntended users are the person, persons, organisation or group for whom the practitioner prepares an assurance report.
- Intention to create legal relationsAn objective intention that an agreement should have legal consequences, assessed in its circumstances.
- Intercompany management chargeAn intercompany management charge is a fee charged by one group entity to another for specified management or support services.
- Interest coverInterest cover is a specified profit subtotal divided by finance costs. The numerator depends on the paper and period; ACCA FR’s IFRS 18 guidance uses profit before financing and income taxes.
- Interest on a partner’s loanInterest on a genuine loan advanced by a partner is a finance cost of the partnership before profit appropriation, rather than interest on ownership capital.
- Interest on capitalInterest on capital is an agreed allocation of partnership profit based on partners’ capital balances.
- Interest on drawingsInterest on drawings is an agreed charge to a partner for withdrawing funds during the period.
- Interest rate capAn option-based arrangement that limits the relevant floating reference rate above a specified level, subject to its terms and premium.
- Interest rate collarA combination of option positions that sets upper and lower boundaries for a specified rate exposure.
- Interest rate floorAn option-based arrangement providing compensation when a covered reference rate falls below a specified level.
- Interest rate futuresStandardised futures linked to an interest-rate instrument or reference rate and used to manage rate exposure.
- Interest rate guaranteeA cash-settled interest rate option designed to protect against an adverse interest rate movement while preserving favourable movements.
- Interest rate optionA contract giving its holder a right, without an obligation, to obtain a specified interest-rate-related payoff or position.
- Interest rate parityThe relationship between spot and forward exchange rates and interest rates that prevents a covered currency investment from offering a riskless arbitrage under the model's assumptions.
- Interest rate riskThe risk that changes in interest rates adversely affect cash flows, investment values or financing costs.
- Interest rate swapAn agreement to exchange interest cash flows calculated on a notional principal, commonly fixed-rate payments for floating-rate payments in one currency.
- Interest rate swap valuationThe estimation of a swap's value from its remaining contractual cash flows and appropriate discount rates.
- Interest tax shieldThe reduction in tax payment attributable to an eligible interest deduction, subject to applicable rules and timing.
- Interest-rate matchingA technique that offsets interest-rate-sensitive income and expense with compatible amounts and repricing characteristics.
- Interest-rate smoothingA technique using a mix of fixed- and floating-rate obligations to moderate sensitivity to changes in interest rates.
- Interim auditInterim audit work is performed before the end of the reporting period, often to understand the entity, assess risks and test controls or transactions.
- Interim financial reportAn interim financial report is a financial report containing a complete or condensed set of financial statements for a period shorter than a full financial year.
- Internal auditInternal audit is an independent, objective assurance and advisory activity within an organisation that evaluates and helps improve governance, risk management and control.
- Internal audit reportAn internal audit report communicates the scope, findings, conclusions and recommendations of an internal audit assignment to appropriate recipients.
- Internal benchmarkingInternal benchmarking compares comparable activities or units within the same organisation.
- Internal controlAn entity’s system of internal control comprises processes and controls designed to provide reasonable assurance about objectives relating to operations, reporting and compliance.
- Internal control evaluation questionnaireAn internal control evaluation questionnaire asks whether specified control objectives are achieved, often using questions designed to reveal possible weaknesses.
- Internal control in a small entityA small entity’s controls may be informal or rely heavily on owner-manager involvement, with limited segregation of duties.
- Internal control questionnaireAn internal control questionnaire asks what controls exist and how a process operates.
- Internal failure costInternal failure costs arise from defects or non-conformance identified before delivery to the external customer.
- Internal financeFunds generated or released within an organisation rather than obtained directly from a new external provider.
- Internal rate of returnA discount rate at which a project's net present value is zero.
- Internal stakeholderAn internal stakeholder participates within the organisation, typically as an employee or manager.
- Internally generated intangible assetAn internally generated intangible asset is an identifiable non-monetary asset without physical substance created within an entity, subject to IAS 38’s recognition requirements.
- International Accounting Standards Board (IASB)The IASB is the independent standard-setting board within the IFRS Foundation that develops IFRS Accounting Standards.
- International Auditing and Assurance Standards BoardThe International Auditing and Assurance Standards Board, or IAASB, is an independent standard-setting body that develops international auditing, quality management, assurance and related services standards.
- International Corporate Governance NetworkThe International Corporate Governance Network is an investor-led organisation that promotes effective corporate governance and investor stewardship.
- International Federation of AccountantsThe International Federation of Accountants is a global organisation for the accountancy profession.
- International Fisher effectA theoretical relationship linking differences in nominal interest rates to expected exchange-rate changes under specified assumptions.
- International Public Sector Accounting StandardsInternational Public Sector Accounting Standards are accounting standards developed by the International Public Sector Accounting Standards Board for public-sector general-purpose financial reporting.
- International Standards on AuditingInternational Standards on Auditing (ISAs) are standards issued by the IAASB for audits of historical financial information.
- International Sustainability Standards BoardThe ISSB is a standard-setting board of the IFRS Foundation that develops IFRS Sustainability Disclosure Standards.
- International business structureAn international business structure allocates responsibilities across countries, products and functions.
- International commercial arbitrationA dispute-resolution process in which parties agree to have a dispute decided by an arbitral tribunal.
- International division structureAn international division structure groups an organisation’s overseas activities under a division separate from domestic operations.
- International investment appraisalEvaluating an investment across currencies and tax jurisdictions using consistent, relevant cash flows and required returns.
- International subsidiary structureAn international subsidiary structure organises foreign operations mainly by country, giving local management substantial responsibility for functions and adaptation.
- International tradeInternational trade is the exchange of goods or services across national borders.
- International transfer pricingInternational transfer pricing applies internal transaction prices across jurisdictions.
- Intimidation threatAn intimidation threat arises when actual or perceived pressure deters a professional accountant from acting objectively.
- Intra-group balancesIntra-group balances are amounts owed between entities included in the same consolidation.
- Intra-group transactionAn intra-group transaction occurs between entities within the same group.
- Intragroup dividendAn intragroup dividend is a distribution paid by one group entity to another group entity.
- Intragroup eliminationIntragroup elimination removes balances and transactions between entities in a consolidated group from the group financial statements.
- IntrapreneurshipIntrapreneurship is entrepreneurial activity within an existing organisation.
- Intrinsic rewardAn intrinsic reward is satisfaction arising from doing the work itself, such as achievement, learning, meaningful contribution or exercising responsibility.
- InventoryInventory comprises assets held for sale, being produced for sale, or materials and supplies consumed in production or services.
- Inventory controlInventory control coordinates ordering, receiving, storage, issue and record keeping so materials are available when needed without excessive investment, deterioration or loss.
- Inventory conversion costsConversion costs include direct production labour and a systematic allocation of fixed and variable production overheads.
- Inventory countAn inventory count establishes the quantities physically held at a specified time.
- Inventory count attendanceInventory count attendance involves the auditor being present at physical inventory counting when required and practicable, evaluating management’s instructions and procedures, observing their performance, inspecting inventory and performing test counts.
- Inventory deteriorationInventory deterioration is a decline in the physical condition or usable life of items while they are held.
- Inventory lossesAn inventory loss can arise from damage, theft, obsolescence or a reduction in net realisable value below cost.
- Inventory purchase costsPurchase cost includes purchase price, import duties and non-recoverable taxes, transport and handling directly attributable to acquisition, less trade discounts and rebates.
- Inventory system controlsInventory system controls govern activities such as ordering, receiving, storing, counting and recording inventory.
- Inventory turnover periodInventory holding period is inventory divided by cost of sales, multiplied by 365 days; average inventory may be used when available.
- Investing activitiesInvesting cash flows generally include cash for acquiring and disposing of long-term assets and investments outside cash equivalents.
- Investment appraisalThe evaluation of a proposed investment's costs, benefits and risks to decide whether it should proceed.
- Investment centreAn investment centre is a responsibility unit whose manager influences profit and the investment in assets or capital supporting it.
- Investment entityAn investment entity is an entity that meets IFRS 10’s definition concerning investment purpose, return objectives and fair-value evaluation.
- Investment portfolioAn investment portfolio is a collection of investment positions held or managed together for specified objectives.
- Investment propertyInvestment property is property held to earn rentals, for capital appreciation or both, rather than for owner occupation, production, administration or ordinary-course sale.
- Investment property fair-value modelThe IAS 40 fair-value model measures investment property after initial recognition at fair value, with changes generally recognised in profit or loss.
- Investment time horizonAn investment time horizon is the period over which an investor or organisation plans to assess and use an investment.
- Investor exit routeAn investor exit route is a feasible way to realise or transfer an investment interest or otherwise end the investment on specified terms.
- Investor ratiosInvestor ratios relate an entity’s earnings, dividends or share price to a measure relevant to shareholders.
- Investors’ Relief (UK capital gains tax)A reduced capital gains tax rate for qualifying individual investors disposing of eligible shares.
- Invitation to treatAn indication inviting others to make offers or begin negotiations rather than an offer intended to bind immediately upon acceptance.
- InvoiceAn invoice requests payment and documents a sale, normally showing the parties, goods or services, amount and applicable tax.
- Invoice discountingFinance advanced against eligible sales invoices, commonly while the business continues managing its own customer collections.
- Involuntary stakeholderAn involuntary stakeholder acquires a stake through exposure to an organisation’s effects without choosing the relevant relationship or risk.
- Irrecoverable debtAn irrecoverable debt is a receivable determined uncollectible and removed from the ledger.
- Irredeemable debtDebt with no contractual maturity date for repayment of principal, though its terms may include other features.
- Irredeemable preference sharesIrredeemable preference shares do not have a contractual redemption date.
- Islamic financeFinancial arrangements structured to comply with applicable Islamic principles, including prohibitions on riba and requirements relating to genuine transactions and risk.
- Iso-contribution lineAn iso-contribution line joins product combinations yielding the same total contribution for a linear objective.
- Issue priceThe issue price is the price at which an issuer sells a newly issued security under the terms of that issue.
- Issued capitalIssued share capital is the nominal value of shares actually issued, distinguished from proceeds above nominal value.
J
- Job cost recordA job cost record brings together the costs assigned to a specific job.
- Job costingJob costing collects costs for a separately identifiable job, contract or assignment whose requirements differ from other work.
- Job descriptionA job description sets out the purpose, main duties, responsibilities and reporting relationships of a role.
- Job enlargementJob enlargement broadens a job by adding a greater variety of tasks at a similar level of responsibility.
- Job enrichmentJob enrichment increases the depth of a job by adding meaningful responsibility, discretion and opportunities for achievement.
- Job rotationJob rotation moves a person between different jobs or assignments, often according to a planned schedule.
- Job time recordA job time record identifies how employee time was spent between jobs or activities.
- Job-related accommodation exemption (UK)An exemption that can prevent an employment accommodation benefit being taxed when specific statutory job-related conditions are met.
- Johnson, Scholes and Whittington strategic-management modelThe Johnson, Scholes and Whittington strategic-management model links strategic analysis, strategic choice and strategy implementation.
- Joint arrangementA joint arrangement is an arrangement of which two or more parties have joint control.
- Joint auditA joint audit is an audit engagement in which two or more audit firms are appointed to carry out the audit and issue a report under applicable law and standards.
- Joint controlJoint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about its relevant activities require the unanimous consent of the parties sharing control.
- Joint costJoint cost is the shared cost of a process producing joint outputs before the split-off point.
- Joint operationA joint operation is a joint arrangement in which the parties sharing joint control have rights to its assets and obligations for its liabilities.
- Joint productsJoint products are two or more commercially significant outputs obtained from the same process before they become separately identifiable.
- Joint property income of spouses or civil partners (UK)The income-tax treatment of jointly owned property where spouses or civil partners live together.
- Joint ventureA joint venture is a joint arrangement in which the parties that have joint control have rights to the arrangement’s net assets.
- Journal and journal entriesA journal records transactions or adjustments in debit and credit form before posting to ledger accounts; specialised day books record routine transactions.
- Judgement in financial reportingJudgement in financial reporting is the reasoned application of accounting requirements to facts and circumstances when an answer is not mechanical.
- Just-in-timeJust-in-time seeks to produce or obtain items when needed by the next process or customer, reducing unnecessary inventory, waiting and waste.
K
- Kaizen costingKaizen costing seeks continuing, incremental cost improvement during ongoing operations, with participation from employees and attention to process learning.
- Kantian ethicsKantian ethics is a duty-based approach associated with philosopher Immanuel Kant.
- Key audit mattersKey audit matters are matters selected from those communicated with those charged with governance that, in the auditor’s professional judgement, were of most significance in the audit of the current-period financial statements.
- Key audit partnerA key audit partner includes the engagement partner, the individual responsible for the engagement quality review, and other audit partners on the engagement team who make key decisions or judgements on significant matters, as defined by the applicable ethics code.
- Key performance indicatorA key performance indicator is a selected measure of progress towards an important objective or critical success factor.
- King corporate governance codesThe King reports and codes are South African corporate-governance frameworks.
- Knowledge managementKnowledge management coordinates how useful knowledge is created, captured, shared, maintained and applied.
- Kolb’s experiential learning cycleKolb’s experiential learning cycle links concrete experience, reflective observation, abstract conceptualisation and active experimentation.
- Kotter and Schlesinger’s change approachesKotter and Schlesinger distinguish approaches to resistance: explaining and communicating, involving people, providing support, negotiating, manipulation or co-optation, and coercion.
- Kotter’s eight-step change modelKotter’s original eight-step model links urgency, a guiding coalition, a vision, communication, enabling action, early successes, further improvement and embedding new practices.
L
- LIFO (last in, first out)LIFO assigns the latest inventory costs to items sold first. IAS 2 prohibits its use; it is a comparison term, not an acceptable current FA inventory formula.
- Labour (factor of production)Labour as a factor of production is human effort and skill applied to producing goods and services.
- Labour efficiency ratioThe labour efficiency ratio compares standard hours for actual output with actual hours worked: standard hours produced ÷ actual hours × 100%.
- Labour efficiency varianceThe labour efficiency variance values the difference between standard hours for actual output and actual hours at the standard hourly rate.
- Labour rate varianceThe labour rate variance compares the standard hourly rate with the actual rate for the actual hours in the analysis.
- Labour recording and payroll functionsLabour and payroll controls distinguish employee-authorisation records, attendance, job activity and wage calculation.
- Labour total varianceThe labour total variance compares standard labour cost for actual output with actual labour cost.
- Labour turnoverLabour turnover measures staff movement over a period, commonly using replacements as a percentage of average employees for a replacement-based rate.
- Lagging indicatorA lagging indicator reports an outcome after the relevant activity has occurred, such as completed sales profit, defects reported by customers or staff turnover.
- Land (factor of production)Land as a factor of production means naturally occurring resources used in economic activity, not only the area on which a building stands.
- Large-company corporation tax instalments (UK)Quarterly payments of estimated corporation tax required of qualifying large companies.
- Late payment interest (UK tax)Simple interest charged on unpaid tax for the period it remains overdue.
- Lead timeLead time is the elapsed time between initiating replenishment and receiving inventory ready for use.
- LeadershipLeadership influences people to pursue shared purposes and respond to challenges.
- Leadership styleA leadership style is a recurring pattern in how a leader directs, supports, communicates with and involves others.
- Leading and laggingChanging the timing of eligible currency receipts or payments to manage exposure, funding or expected exchange movements.
- Leading indicatorA leading indicator is intended to signal conditions or actions influencing later outcomes, such as training effectiveness, order pipeline or preventive maintenance.
- League tableA league table ranks organisations or units using selected performance measures.
- Lean accountingLean accounting adapts internal costing, reporting and controls to support lean operations and understandable value-stream performance.
- Lean operationsLean operations seek to maximise customer value while removing waste, delays and unnecessary activity across the flow of work.
- LearningLearning develops knowledge, understanding, skills or behaviours through experience, study, reflection or practice.
- Learning curve and production costA learning-curve cost estimate applies an explicit learning model to forecast how experience may change production cost.
- Learning organisationA learning organisation deliberately develops its ability to learn from experience, share knowledge and adapt its practices.
- Learning theoryA learning theory provides an explanation of how learning occurs and what conditions may support it.
- LeaseA lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
- Lease and non-lease componentsA contract can contain a lease component and separate non-lease components, such as maintenance services.
- Lease commencement dateThe commencement date of a lease is the date on which the lessor makes the underlying asset available for use by the lessee.
- Lease incentiveA lease incentive is a payment by a lessor to a lessee associated with a lease, or the reimbursement or assumption by the lessor of costs of the lessee.
- Lease inception dateThe inception date of a lease is the earlier of the date of the lease agreement and the date the parties commit to the principal terms and conditions.
- Lease liabilityA lease liability is the lessee’s obligation to make lease payments, initially measured at the present value of qualifying unpaid payments.
- Lease modificationA lease modification is a change in the scope of a lease, or its consideration, that was not part of its original terms and conditions.
- Lease or buy decisionA financing comparison between obtaining an asset through a lease and purchasing it, commonly using borrowing.
- Lease termThe lease term is the non-cancellable period of a lease plus extension or termination option periods that the lessee is reasonably certain to exercise or not exercise, respectively.
- Least developed country categoryThe UN least developed country category identifies countries facing specified severe structural impediments to sustainable development.
- Least-preferred-coworker measureThe least-preferred-coworker measure asks a leader to describe a coworker with whom they least preferred to work.
- Leavitt’s communication networksLeavitt’s communication networks illustrate how permitted links between group members affect information flow and coordination.
- Ledger accountsA ledger account accumulates entries for one asset, liability, equity, income or expense and yields a balance.
- Legal barrier to entryA legal barrier to entry is a law-based requirement or restriction affecting access to a particular business activity or market.
- Legal obligationA legal obligation is an obligation arising from a contract, legislation or other operation of law.
- Legitimate powerLegitimate power is influence arising from an accepted right to direct others within a particular role or framework.
- Let-out clauseA let-out clause gives a party a specified contractual right to exit or avoid an obligation when its conditions are met.
- Letter of creditA bank undertaking to pay a beneficiary when specified compliant documents and conditions are presented.
- LeverageFinancial leverage describes reliance on debt finance and its effect on returns and financial risk.
- Leveraged buy-outAn acquisition financed substantially with debt, with repayment dependent on the acquired business and transaction structure.
- Lewin’s force-field analysisForce-field analysis examines forces supporting a proposed change and forces restraining it.
- Lewin’s three-stage change modelLewin’s three-stage model describes unfreezing established patterns, moving or changing, and refreezing or stabilising the new pattern.
- LiabilityA liability is a present obligation to transfer an economic resource arising from past events.
- Life-cycle costingLife-cycle costing considers costs and revenues across the relevant life of a product or service rather than only its manufacturing period.
- Lifetime expected credit lossesLifetime expected credit losses are expected credit losses arising from all possible default events over the expected life of a financial instrument.
- Limitations of earnings per shareEPS limitations are factors that prevent earnings per share alone from fully explaining performance or shareholder value.
- Limitations of financial statementsLimitations of financial statements are factors that restrict what users can infer from reported financial information.
- Limitations of internal controlInternal control has inherent limitations, including human error, collusion, management override and cost constraints.
- Limitations of ratio analysisRatio-analysis limitations are factors that can make calculated ratios incomplete, distorted or difficult to compare.
- Limited assuranceLimited assurance is a lower level of assurance than reasonable assurance.
- Limited liabilityLimited liability normally limits shareholders' exposure for company debts to any unpaid amount on their shares, subject to law and personal guarantees.
- Limited liability companyA limited liability company is a separate legal entity whose owners normally have limited liability.
- Limiting factorA limiting factor restricts the activity or output an organisation can achieve, such as scarce labour, materials, machine hours or customer demand.
- Line of best fitA line of best fit summarises an estimated linear relationship between variables.
- Linear programmingLinear programming optimises a linear objective subject to linear constraints and non-negativity or other stated restrictions.
- Linear regressionLinear regression estimates a straight-line relationship between a response variable and one or more explanatory variables.
- Linear relationshipA linear relationship has a constant rate of change and can be represented by a straight-line equation.
- LiquidityLiquidity is the ability to meet obligations as they fall due and the ease of converting assets to cash.
- Liquidity preference theory of interest ratesA theory that investors require additional compensation for committing funds for longer periods, alongside expectations about future short rates.
- Liquidity ratiosLiquidity ratios compare selected current resources with short-term obligations to help assess liquidity.
- ListeningListening attends to, interprets and checks the meaning of another person’s communication.
- Listing rulesListing rules are requirements governing admission to a specified securities-listing regime and the obligations that continue after admission.
- Loan and guaranteeA loan provides funds subject to repayment terms, while a guarantee is an undertaking to meet another party’s obligation if specified conditions occur.
- Loan default and breachA loan default or breach occurs when a borrower fails to meet a contractual requirement of a borrowing arrangement.
- Loan guaranteeAn undertaking by a guarantor to meet specified obligations if a borrower fails to do so, subject to its terms.
- Loan stock and bondsLoan stock or bonds are borrowings issued to investors, normally bearing interest and repayable under stated terms.
- Lockett’s barriers to appraisalLockett’s appraisal barriers describe ways a review can lose its developmental purpose: confrontation, one-sided judgement, purposeless chat, bureaucracy, unfinished business and an isolated annual event.
- LogisticsLogistics concerns planning and managing movement, storage and related information so that goods or services are available where and when needed.
- Long-term orientation (Hofstede)Long-term orientation is a later dimension of Hofstede’s national-culture model contrasting more pragmatic adaptation and future-oriented perseverance with stronger emphasis on normative traditions and near-term obligations.
- Long-term solvencyLong-term solvency is the ability to sustain financing and meet longer-term obligations.
- Loss given defaultThe proportion of exposure expected or actually lost if a borrower or counterparty defaults, on a specified calculation basis.
- Loss of control of a subsidiaryLoss of control occurs when a parent no longer meets all the control criteria for a subsidiary, even if it retains an investment.
- Low-value lease exemptionA lessee may elect not to recognise a right-of-use asset and lease liability for an eligible lease of a low-value underlying asset.
- LowballingLowballing is quoting a very low fee to obtain an engagement, potentially creating self-interest or pressure threats if the fee is insufficient for the required quality of work.
M
- Macaulay durationThe present-value-weighted average time to receive a bond's contractual cash flows under the chosen yield assumptions.
- Macroeconomic policy objectivesMacroeconomic policy objectives are the outcomes governments and monetary authorities seek for the economy, such as sustainable growth, price stability, employment and a manageable external position.
- MacroeconomicsMacroeconomics studies the economy as a whole, including output, employment, inflation and international flows.
- Maier’s appraisal interview approachesMaier distinguishes tell-and-sell, tell-and-listen and problem-solving approaches to an appraisal interview.
- Main individual capital gains tax rates (UK, 2025–26)The 18% and 24% main capital-gains tax rates used for qualifying individual taxable gains in the 2025–26 TX assessment basis.
- Make-or-buy decisionA make-or-buy decision compares internal production with external purchase on relevant future costs and benefits.
- ManagementManagement coordinates people and other resources to achieve organisational objectives through activities such as planning, organising, directing and control.
- Management (or cost) accountingManagement accounting provides information for internal planning, control and decisions; cost accounting focuses on measuring and analysing costs.
- Management accountantA management accountant works with managers to interpret financial and non-financial information, plan activities, evaluate alternatives and assess performance.
- Management accountingManagement accounting provides financial and non-financial information to help people plan, make decisions, control activities and evaluate performance within an organisation.
- Management accountsManagement accounts are internal reports prepared to help managers plan, control activities, make decisions and assess performance.
- Management buy-inA purchase of a business by an external management team that intends to manage it after acquisition.
- Management buy-outA purchase of a business or division by its existing management team, often supported by external finance.
- Management commentaryA management commentary is a narrative report that explains matters relevant to understanding an entity’s financial position, performance, cash flows and prospects.
- Management controlManagement control coordinates how resources and actions are directed towards strategic objectives.
- Management override of controlsManagement override occurs when management bypasses controls that otherwise operate effectively, potentially enabling fraudulent reporting or concealment.
- Management representation letterA management representation letter provides required and other appropriate written representations to the auditor.
- Management responsibilities in an auditManagement is responsible for preparing the financial statements in accordance with the applicable framework, maintaining internal control necessary for that preparation and providing the auditor with relevant information and access.
- Management systemA management system is a set of connected policies, responsibilities, processes and arrangements used to pursue objectives and manage activities.
- Management-defined performance measureA management-defined performance measure is a qualifying management-defined subtotal of income and expenses communicated outside the financial statements for the specified purpose under IFRS 18.
- Management’s expertA management’s expert is an individual or organisation with expertise in a field other than accounting or auditing whose work helps the entity prepare its financial statements.
- Management’s point estimateManagement’s point estimate is the amount selected by management for recognition or disclosure as an accounting estimate in the financial statements.
- Mandatory disclosureMandatory disclosure is information an entity is required to provide under applicable law, regulation or an adopted reporting framework.
- Mandatory-bid ruleA mandatory-bid rule can require an offer to other shareholders when a person or concert party acquires a specified degree of control.
- Manual journal entryA manual journal entry is an entry deliberately prepared and entered by a user rather than generated automatically from a routine transaction process.
- Manufactured capitalManufactured capital comprises human-made physical resources used in producing goods or services in integrated reporting.
- Manufacturer or dealer lessorA manufacturer or dealer lessor is an entity that leases assets it manufactures or sells as part of its ordinary business.
- Margin and marking to marketCollateral and settlement arrangements used to support performance of traded or collateralised financial contracts as their values change.
- Margin of safetyThe margin of safety is the excess of actual or planned sales over break-even sales on the same basis.
- Marginal costMarginal cost is the additional cost from one additional unit or a small change in activity.
- Marginal cost of capitalThe required return or effective cost associated with raising the next increment of finance.
- Marginal costingMarginal costing assigns variable production costs to units and treats fixed production overhead as a period cost.
- Marginal revenueMarginal revenue is the change in total revenue from selling one more unit or a small increase in quantity.
- Mark-upMark-up is gross profit expressed as a percentage of cost: gross profit divided by cost of sales times 100.
- Market developmentMarket development takes an existing product or service into a new market, such as a different geography, channel or customer segment.
- Market equilibriumMarket equilibrium is the price and quantity at which quantity demanded equals quantity supplied in the relevant model.
- Market penetrationMarket penetration seeks more business from existing products in existing markets, for example by increasing usage, winning customers from competitors or improving retention.
- Market portfolioA theoretical portfolio containing all relevant risky assets in proportion to their market values within the model's defined market.
- Market price riskMarket price risk concerns exposure to adverse changes in relevant market prices, rates or other market variables.
- Market researchMarket research gathers and analyses information to understand customers, competitors and the market conditions relevant to a decision.
- Market risk (financial instruments)Market risk is the risk that a financial instrument’s fair value or future cash flows fluctuate because market prices change.
- Market risk premiumThe expected return on the market portfolio above the risk-free return.
- Market segmentationMarket segmentation groups customers with meaningfully different needs, behaviour or willingness to pay so an organisation can tailor products, service and communication.
- Market segmentation theoryA theory that yields at different maturities are strongly influenced by supply and demand within separate maturity segments.
- Market shareMarket share is an organisation’s sales expressed as a proportion of total sales in a defined market and period.
- Market share varianceA market share variance compares actual sales with the quantity expected if budget market share had been achieved in the actual total market.
- Market sizeMarket size is total sales or demand within a specified market and period, measured consistently in units or money.
- Market size varianceA market size variance isolates the sales-volume effect of the total market being different from the original forecast, assuming the organisation maintains its budget market share.
- Market targetingMarket targeting selects the customer segments an organisation intends to serve.
- Market value of sharesA share's market value is the price at which it can be traded in a market at a particular time.
- Market value weightsThe proportions of total finance represented by the current market values of each financing source.
- MarketingMarketing identifies customer needs and develops, communicates and delivers an offering intended to satisfy them while meeting organisational objectives.
- Marketing mix (4Ps)The four-P marketing mix coordinates product, price, place and promotion to serve a chosen customer group.
- Marketing mix (7Ps)The seven-P marketing mix extends product, price, place and promotion with people, process and physical evidence.
- Marketing orientationMarketing orientation organises business decisions around understanding and responding to selected customer needs and the market environment.
- Marketing-related intangible assetA marketing-related intangible asset is an identifiable intangible asset associated with marketing, such as a qualifying acquired trade name or trademark.
- Marriage allowance (UK income tax)An election allowing an eligible spouse or civil partner to transfer a fixed portion of personal allowance to their partner.
- Marriage or civil partnership gift exemption (UK inheritance tax)An inheritance-tax exemption for qualifying gifts made in consideration of a marriage or civil partnership, subject to donor-based limits.
- Masculinity and femininity (Hofstede)Masculinity and femininity are Hofstede’s historical labels for a national-culture dimension contrasting emphasis on competitive achievement and material success with emphasis on cooperation, care and quality of life.
- Maslow’s hierarchy of needsMaslow’s hierarchy is a motivation theory that groups needs into physiological, safety, social or belonging, esteem and self-actualisation needs.
- Master budgetA master budget consolidates coordinated functional and financial budgets into the organisation’s overall plan, commonly including budgeted profit or loss, financial position and cash information.
- Master dataMaster data is relatively persistent information reused when transactions are processed, such as customer records, supplier details, account codes or employee pay rates.
- Matching currency cash flowsUsing receipts and payments in the same currency and compatible periods to reduce the amount requiring conversion or external hedging.
- Matching working capital funding policyAn approach that aligns the expected duration of financing with the duration of assets or working-capital needs.
- Material control cycleThe material control cycle links the need for materials with authorisation, ordering, receipt, storage, issue and subsequent record updates.
- Material flow cost accountingMaterial flow cost accounting measures physical material flows and assigns relevant monetary costs to both products and material losses.
- Material inconsistencyA material inconsistency occurs when other information contradicts the financial statements or knowledge obtained during the audit in a way that may be material.
- Material mix varianceThe material mix variance measures the cost effect of actual input proportions differing from the standard mix for the actual total input.
- Material price varianceThe material price variance measures the difference between standard and actual price for the actual quantity valued.
- Material purchases budgetA material purchases budget calculates the quantities to buy after considering planned usage and desired raw-material inventory.
- Material requisition noteA material requisition note authorises and records materials issued from stores to a job, department or other cost object.
- Material returned noteA material returned note records unused material returned from a job or department to stores.
- Material total varianceThe material total variance compares standard material cost for actual output with actual material cost on a consistent usage basis.
- Material transfer noteA material transfer note records material moved directly between jobs, departments or stores locations.
- Material uncertainty related to going concernA material uncertainty related to going concern exists when the magnitude and likelihood of potential effects of identified events or conditions are such that appropriate disclosure is necessary for fair presentation or the applicable framework.
- Material usage budgetA material usage budget calculates the material required for planned production using the specification and any wastage allowance.
- Material usage varianceThe material usage variance values the difference between standard quantity allowed for actual output and actual quantity used at the standard price.
- Material yield varianceThe material yield variance measures the output or input-efficiency effect after separating material mix.
- MaterialityInformation is material if omitting, misstating or obscuring it could reasonably influence primary users' decisions about a reporting entity.
- Materiality and aggregationMateriality and aggregation concern how information is grouped or separated so that financial statements communicate material information clearly.
- Materiality in an auditMateriality concerns misstatements, including omissions, that could reasonably influence decisions of users taken on the basis of the financial statements.
- Matrix structureA matrix structure combines two organisational dimensions, commonly functional expertise and product or project responsibilities.
- Maturity transformationFunding longer-term assets or loans using liabilities with shorter maturities or earlier withdrawal rights.
- MaximaxMaximax chooses the option with the highest possible payoff when probabilities are not used in the decision rule.
- MaximinMaximin chooses the option with the best worst-case payoff when probabilities are not used in the rule.
- McGregor’s Theory X and Theory YMcGregor’s Theory X and Theory Y describe contrasting managerial assumptions about people and work.
- McKinsey 7S modelThe 7S model examines alignment between strategy, structure, systems, shared values, style, staff and skills.
- Measurement in financial reportingMeasurement in financial reporting is the process of determining the monetary amount at which an element is recognised in financial statements.
- Measuring progress over time (IFRS 15)Progress towards satisfying an over-time performance obligation is measured using an appropriate output or input method.
- MedianThe median is the middle value when observations are arranged in order.
- Mendelow’s power–interest matrixMendelow’s power–interest matrix classifies stakeholders by their power to influence an issue and their interest in it.
- MentoringMentoring is a developmental relationship in which a more experienced or suitably knowledgeable person supports another person’s learning, perspective and career development.
- MergerA combination of businesses into a single economic arrangement under an agreed transaction structure.
- Mezzanine financeA financing layer between senior debt and equity, often subordinated debt with a higher required return and sometimes equity-linked features.
- Mid-year acquisition of a subsidiaryA mid-year acquisition occurs when a parent obtains control of a subsidiary partway through the reporting period.
- Middle lineThe middle line links senior leadership with the operating core through the managerial hierarchy in Mintzberg’s model.
- Miller–Orr cash modelA cash-control model for uncertain daily cash movements, using lower and upper limits and a return point.
- Minimax regretMinimax regret chooses the alternative with the smallest maximum opportunity loss relative to the best option in each state of nature.
- Minimum transfer priceA supplying division’s minimum transfer price for a decision is relevant incremental cost of the transfer plus opportunity cost of the best alternative use forgone.
- Mintzberg’s managerial rolesMintzberg’s managerial roles describe ten connected roles grouped into three categories.
- Misappropriation of assetsMisappropriation of assets is theft or misuse of an entity’s assets, which may be concealed by false records or documents.
- Misrepresentation (English contract law)A false representation that induces another party to enter a contract, subject to the applicable legal rules.
- Mission statementA mission statement communicates the organisation’s purpose, who it serves and important values or boundaries guiding its work.
- Misstatement of other informationA misstatement of other information occurs when information in an annual report outside the audited financial statements and auditor’s report is incorrectly stated or otherwise misleading, including when it conflicts with the statements or the auditor’s knowledge.
- Mitigation of contract lossA claimant must take reasonable steps to limit loss following a breach when seeking recoverable damages.
- Mixed acquisition offerAn acquisition proposal in which consideration combines cash with shares or other securities, according to stated terms.
- Mixed groupA mixed group structure includes interests in subsidiaries and associates, and may also include interests in joint arrangements.
- ModeThe mode is the most frequently occurring value or category in a dataset.
- Modified audit opinionA modified audit opinion is a qualified opinion, adverse opinion or disclaimer of opinion.
- Modified durationA measure approximating the proportional change in a bond's price for a small change in yield.
- Modified internal rate of returnA project return measure that uses specified financing and reinvestment rates to combine outflows and inflows into a single rate.
- Modigliani–Miller capital structure propositionsTheoretical propositions showing how financing structure affects value and required returns under explicit market and tax assumptions.
- Modular organisationA modular organisation divides a product or production system into components that internal or external specialists can supply and the organisation integrates.
- Monetary assetA monetary asset is currency held or an asset to be received in a fixed or determinable number of currency units.
- Monetary itemA monetary item is a unit of currency held, or an asset or liability to be received or paid in a fixed or determinable number of currency units.
- Monetary policyMonetary policy uses central-bank tools affecting financial conditions to pursue objectives such as price stability.
- Monetary-unit samplingMonetary-unit sampling treats individual monetary units as selection units, so higher-value items have a greater chance of selection.
- Money launderingMoney laundering involves concealing or disguising the origins or nature of criminal proceeds so they appear legitimate.
- Money marketA market for short-term borrowing, lending and related financial instruments, commonly with original maturities of up to one year.
- Money market hedgeUsing borrowing, deposits and an immediate currency exchange to fix the home-currency effect of a future foreign-currency payment or receipt.
- Monitoring of controlsMonitoring of controls involves ongoing or separate evaluations of whether internal control is operating as intended and appropriate action to address deficiencies.
- Monopolistic competitionMonopolistic competition is a model with many suppliers offering differentiated products and relatively accessible entry and exit.
- MonopolyA monopoly has a single supplier in the relevant market, protected by barriers that limit effective entry.
- Monte Carlo simulation in investment appraisalA modelling technique that repeatedly samples uncertain project inputs to produce a distribution of possible appraisal outcomes.
- Moral framingMoral framing is the way language and presentation draw attention to, or conceal, the ethical dimensions of a decision.
- Moral intensityMoral intensity describes characteristics of an issue that affect how strongly its ethical significance is perceived.
- Moral stanceA moral stance is the position a person or organisation adopts on an ethical issue.
- MoraleMorale is the level of confidence, enthusiasm and collective spirit people feel towards their work or group.
- MotivationMotivation concerns the forces influencing the direction, intensity and persistence of effort towards an objective.
- Moving averageA moving average smooths a time series by averaging a specified number of consecutive observations and moving the window forward.
- Moving weighted average costCumulative weighted average costing, also called moving average, recalculates an inventory unit cost after each new receipt.
- MudarabaA partnership in which one party provides capital and another manages the enterprise, sharing profits under agreed terms.
- Multi-skilled teamA multi-skilled team has a range of capabilities that enables it to carry out different tasks or respond flexibly to work requirements.
- Multinational enterpriseA multinational enterprise conducts or controls business activities across more than one country through an international organisational structure.
- Multiplicative time series modelA multiplicative time series model combines a trend and seasonal effect by multiplication.
- Multiplier effectThe multiplier effect describes how an initial change in spending can generate further rounds of income and expenditure.
- Multistage samplingMultistage sampling selects a sample through two or more successive selection stages.
- MurabahaA sale in which a provider acquires an asset and sells it to the customer at a disclosed cost plus an agreed profit margin.
- MusharakaA partnership in which parties contribute capital to a venture and share profits and risks under agreed terms.
- Mutual organisationA mutual organisation is owned or governed for the benefit of its members rather than a separate class of outside shareholders.
- Mutually exclusive projectsProjects for which choosing one prevents choosing another because they are incompatible alternatives under the decision being analysed.
- Myers–Briggs Type IndicatorThe Myers–Briggs Type Indicator is a self-report framework describing preferences through extraversion/introversion, sensing/intuition, thinking/feeling and judging/perceiving.
N
- Narrative reportingNarrative reporting communicates explanations and context about an entity’s activities, performance, strategy, risks and prospects in words and supporting information.
- Narrow stakeholderA narrow stakeholder, in the narrow–wide classification used in stakeholder analysis, is closely affected by or dependent on the organisation’s activities.
- National Insurance contributions (UK)National Insurance contributions are UK payments calculated under rules that vary by class, earnings and status.
- National accounting standard-setterA national accounting standard-setter develops or contributes to financial reporting standards or guidance within a particular jurisdiction.
- Natural capitalNatural capital comprises environmental resources and processes on which an organisation depends or which it affects.
- NeedsNeeds are requirements people seek to satisfy, such as basic wellbeing, security or the ability to carry out an activity.
- Negative confirmation requestA negative confirmation request asks a confirming party to respond only if it disagrees with the information provided.
- Negative feedbackNegative feedback counteracts a deviation from a target by using information about actual results to adjust action.
- Negative powerNegative power describes influence exercised through the ability to delay, obstruct or withhold cooperation.
- Neo-human relations schoolThe neo-human relations school is a historical umbrella for approaches that developed interest in people’s needs, motivation and work experience beyond a narrow focus on formal tasks and economic incentives.
- Net asset valuationEstimating equity value from the value of a business's assets less its liabilities on a stated valuation basis.
- Net assetsNet assets are total assets less total liabilities.
- Net investment in a foreign operationA net investment in a foreign operation is the reporting entity’s interest in that foreign operation’s net assets, including certain qualifying monetary items.
- Net investment in a leaseA lessor’s net investment in a finance lease is the gross investment in the lease discounted at the interest rate implicit in the lease.
- Net payNet pay is the amount payable to an employee after subtracting employee deductions from gross pay.
- Net present valueThe present value of a project's relevant cash inflows less the present value of its relevant cash outflows.
- Net profit marginNet profit margin expresses a specified later-stage profit subtotal as a percentage of revenue.
- Net promoter scoreNet promoter score is a customer-feedback measure commonly calculated as the percentage of promoters minus the percentage of detractors using a specified recommendation question and classification.
- Net realisable valueNet realisable value is estimated selling price in the ordinary course of business less estimated completion and selling costs.
- NettingOffsetting eligible reciprocal amounts so that only net balances need to be settled.
- Network effectsNetwork effects occur when the value of an offering to a user depends on participation by other users or complementary groups.
- Nil rate band (UK inheritance tax)The inheritance-tax threshold below which qualifying chargeable value is taxed at nil rate, subject to prior transfers and other rules.
- No gain/no loss spouse transfer (UK capital gains)A qualifying transfer between spouses or civil partners treated as producing neither a gain nor a loss to the transferor.
- Nominal cash flowA cash flow expressed in the money amounts expected to be paid or received at its future date, including forecast price changes.
- Nominal dataNominal data are categories without an inherent order.
- Nomination committeeA nomination committee supports the board’s arrangements for appointments, succession and the skills and composition needed for effective governance.
- Non-adjusting eventA non-adjusting event after the reporting period indicates conditions arising after the reporting date.
- Non-assurance services to an audit clientNon-assurance services provided to an audit client can create self-review, advocacy, self-interest or other independence threats.
- Non-cash consideration in a customer contractNon-cash consideration is consideration in a customer contract payable in a form other than cash.
- Non-cash transactionA non-cash transaction changes assets, liabilities or equity without a cash or cash-equivalent movement.
- Non-compliance with laws and regulationsNon-compliance with laws and regulations, often abbreviated NOCLAR, refers to acts of omission or commission contrary to prevailing laws or regulations by the client or those working for it.
- Non-controlling interestNon-controlling interest is the equity in a subsidiary not attributable directly or indirectly to the parent.
- Non-coterminous reporting datesNon-coterminous reporting dates occur when entities within a group report at different dates.
- Non-current asset held for saleA non-current asset or disposal group is classified as held for sale when its carrying amount will be recovered principally through sale rather than continuing use and the relevant IFRS 5 conditions are met, including availability for immediate sale and a highly probable sale.
- Non-current assetsA non-current asset is an asset not classified as current, typically used or held beyond the operating cycle.
- Non-current assets disposalDisposal removes an asset's carrying amount from the accounts and compares it with disposal proceeds to calculate a gain or loss.
- Non-current liabilityA non-current liability is a liability that does not meet the criteria for classification as current.
- Non-executive directorA non-executive director serves on an entity’s board without a day-to-day executive management role.
- Non-financial performance indicatorA non-financial performance indicator measures an aspect of activity or outcomes without using a monetary result as its primary unit.
- Non-going-concern basisA non-going-concern basis is a basis used when preparation of financial statements on a going-concern basis is no longer appropriate.
- Non-governmental organisationA non-governmental organisation operates outside government control, commonly pursuing social, humanitarian, environmental or other public-interest objectives.
- Non-linear variable costA non-linear variable cost changes with activity but not at a constant amount per additional unit over the range analysed.
- Non-monetary itemA non-monetary item is an asset or liability that is not a unit of currency held and does not require receipt or payment of a fixed or determinable number of currency units.
- Non-negativity constraintA non-negativity constraint prevents a decision variable from taking values below zero where negative production, sales or resource use has no meaningful interpretation.
- Non-production costNon-production costs relate to functions outside producing goods, including selling, distribution, general administration and finance.
- Non-recourse factoringFactoring in which the factor assumes specified customer credit risks, subject to the contract's scope and exclusions.
- Non-sampling riskNon-sampling risk is the risk that the auditor reaches an erroneous conclusion for a reason unrelated to sampling risk.
- Non-statistical audit samplingNon-statistical sampling uses the auditor’s judgement rather than the statistical measurement of sampling risk when selecting and evaluating a sample.
- Non-value-added activityA non-value-added activity consumes resources without contributing to the required customer function, such as avoidable rework, waiting or duplicate data entry.
- Normal capacityNormal capacity is expected average production over several periods under normal circumstances, allowing for planned maintenance.
- Normal expenditure out of income exemption (UK inheritance tax)An exemption for qualifying transfers forming part of normal expenditure from income while maintaining the donor’s usual standard of living.
- Normal lossNormal loss is the loss expected under efficient operating conditions for the process and input quantity concerned.
- Normative stakeholder viewA normative stakeholder view considers duties and justified interests in deciding how an organisation should treat stakeholders.
- Norming (team development)Norming is the stage in Tuckman’s model where a team develops shared expectations, working practices and a stronger sense of cooperation.
- Northern Ireland goods supplied to an EU VAT-registered customerA Northern Ireland-to-EU goods supply that may be zero-rated when specific VAT conditions are met.
- Not-for-profit organisationA not-for-profit organisation pursues objectives other than distributing profits to owners, for example charitable or public-benefit purposes.
O
- OECD corporate governance principlesThe G20/OECD Principles of Corporate Governance provide an international policy benchmark for governance frameworks.
- Objective functionAn objective function expresses the result to maximise or minimise in an optimisation model, using the decision variables.
- Objective of general purpose financial reportingThe objective is to provide useful financial information to existing and potential investors, lenders and other creditors when they make resource decisions.
- ObjectivityObjectivity requires a professional accountant not to compromise professional or business judgement because of bias, conflicts of interest or undue influence.
- Obligating eventAn obligating event is an event that creates a legal or constructive obligation leaving the entity no realistic alternative to settling it.
- ObservationObservation involves watching a process or procedure performed by others.
- ObsolescenceObsolescence is a loss of usefulness or marketability because an item becomes outdated or demand changes.
- Occurrence assertionOccurrence concerns whether recorded transactions and events actually took place and relate to the entity.
- Off-the-job trainingOff-the-job training develops capability away from normal work duties, for example through workshops, simulation, structured study or practice exercises.
- Offer in English contract lawA communicated proposal showing willingness to be bound on stated terms if it is accepted.
- Offer under the CISGA CISG offer is a sufficiently definite proposal to specified persons indicating intent to be bound upon acceptance.
- OffsettingOffsetting presents an asset and liability, or income and expense, as a net amount.
- OffshoringOffshoring locates an activity in another country.
- OligopolyAn oligopoly is a market dominated by a small number of significant suppliers whose decisions are interdependent.
- Omission of a transactionA complete omission occurs when neither side of a transaction is recorded.
- On-the-job trainingOn-the-job training develops capability while working in, or closely alongside, the actual job setting.
- Onerous contractAn onerous contract is a contract in which the unavoidable costs of meeting the contractual obligations exceed the economic benefits expected from it.
- Online brandingOnline branding develops and communicates an offering’s identity through digital channels and customer experiences.
- Opening balances in an initial auditOpening balances are account balances at the beginning of the period.
- Opening inventoryOpening inventory is the inventory carried into the accounting period from the previous period’s closing statement of financial position.
- Operating activitiesOperating cash flows arise from principal revenue-producing activities and other activities that are not investing or financing.
- Operating coreThe operating core consists of people who perform the basic work that produces an organisation’s principal goods or services in Mintzberg’s model.
- Operating cycleThe operating cycle is the time between acquiring assets for processing and realising them in cash or cash equivalents.
- Operating gearingThe sensitivity of operating profit to sales changes caused by fixed operating costs.
- Operating leaseAn operating lease is a lessor lease that does not transfer substantially all risks and rewards incidental to ownership of the underlying asset.
- Operating profitOperating profit is the IFRS 18 subtotal of income and expenses classified in the operating category.
- Operating segmentAn operating segment is a component of an entity that engages in business activities, whose operating results are regularly reviewed by the chief operating decision maker for resource allocation and performance assessment, and for which discrete financial information is available.
- Operating statement (variance reconciliation)An operating statement in standard costing reconciles budgeted profit or contribution to actual results using relevant variances.
- Operational auditAn operational audit examines aspects of an organisation’s operations, often focusing on efficiency, effectiveness, controls and opportunities for improvement.
- Operational controlOperational control manages specific tasks and short-term activities so they are performed effectively and efficiently within the wider plan.
- Operational managementOperational management directs and controls the execution of work within the organisation’s plans and responsibilities.
- Operational riskOperational risk is the risk of loss or disruption arising from inadequate or failed processes, people, systems or external events.
- Operational varianceAn operational variance compares actual results with a justified revised standard or budget, seeking to show performance after allowing for the planning change.
- Operations (business)Business operations are the activities and processes that create and deliver an organisation’s goods or services.
- Operations strategyOperations strategy sets the direction for developing and using operational resources and capabilities to support the organisation’s wider strategy.
- Opportunity costOpportunity cost is the benefit forgone from the best feasible alternative use of a scarce resource.
- Optimal production planAn optimal production plan selects feasible output quantities to maximise the specified objective under the model’s constraints.
- OptionA contract giving its holder a right, without an obligation, to transact on specified terms within the permitted exercise period.
- Option expiry dateAn option’s expiry date is the contractual date after which the relevant option right no longer exists unless its terms provide otherwise.
- Option premiumThe price paid by an option buyer for the contractual right provided by the option.
- Option to abandonA real option to stop an investment and recover a disposal or alternative-use value if continuation becomes unattractive.
- Option to delayA real option to postpone an investment commitment while retaining the ability to invest later.
- Option to expandThe flexibility to increase the scale of a project later if conditions justify the additional investment.
- Option to redeployThe flexibility to change the use of resources or operating mode in response to conditions, subject to the cost and feasibility of switching.
- Ordering costOrdering cost is the relevant cost of placing and receiving an order, excluding the purchase price where that is modelled separately.
- Ordinal dataOrdinal data are categories with a meaningful order but not necessarily equal distances between categories.
- Ordinary business partnership (UK)An ordinary partnership is a business relationship in which partners share responsibility and profits.
- Ordinary least squaresOrdinary least squares estimates regression coefficients by minimising the sum of squared residuals.
- Ordinary resolution (UK company law)A members’ resolution passed by a simple majority under the applicable statutory voting procedure.
- Ordinary sharesOrdinary shares are equity instruments that normally carry voting rights and a residual interest in the company's assets.
- OrganisationAn organisation is an arrangement of people and resources working towards shared purposes through coordinated activities.
- Organisation for Economic Co-operation and DevelopmentThe Organisation for Economic Co-operation and Development is an intergovernmental organisation that provides a forum for policy cooperation, economic and social analysis, data and international standards.
- Organisational cultureOrganisational culture concerns shared assumptions, values and norms influencing how people behave and interpret decisions.
- Organisational flexibilityOrganisational flexibility is the capacity to adjust activities, resources or working arrangements when conditions change.
- Organisational integrationOrganisational integration coordinates functions, units, processes and information so they work towards coherent objectives.
- Organisational knowledgeOrganisational knowledge is the understanding and know-how available to an organisation through its people, relationships, routines, records and systems.
- Organisational structureOrganisational structure allocates roles, responsibilities, authority and reporting relationships so that work can be coordinated.
- OrganisingOrganising arranges work, people, resources and authority so that objectives can be pursued coherently.
- Other comprehensive incomeOther comprehensive income comprises items of income and expense that IFRS standards require or permit to be recognised outside profit or loss.
- Other information in an annual reportOther information is financial or non-financial information, other than the audited financial statements and auditor’s report, included in an entity’s annual report.
- Other matter paragraphAn other matter paragraph refers to a matter other than those presented or disclosed in the financial statements that is relevant to users’ understanding of the audit, the auditor’s responsibilities or the auditor’s report.
- Outbound logisticsOutbound logistics manages storage, order fulfilment and distribution of outputs towards customers.
- Output VATVAT a registered business accounts for on its taxable supplies.
- Output controlAn output control checks, distributes or protects reports and other results generated by a system.
- Output sales taxOutput tax is sales tax charged by a taxable business on its sales and generally owed to the tax authority.
- OutsourcingOutsourcing is engaging an external provider to perform a process or service for an entity.
- Outstanding depositAn outstanding deposit is a receipt recorded in the entity’s bank ledger but not yet shown on the bank statement at the reconciliation date.
- Over-absorptionOver-absorption occurs when overhead charged to output exceeds actual overhead incurred.
- Over-provision of income taxAn over-provision of income tax arises when the previous period’s estimated current tax charge exceeded the amount subsequently determined.
- Over-the-counter optionAn option negotiated outside an exchange, allowing terms to be tailored to the parties' needs.
- Overall audit reviewThe overall audit review near completion considers the financial statements, disclosures and evidence obtained to assess whether the auditor’s conclusions are appropriate.
- Overall audit strategyThe overall audit strategy establishes the scope, timing and direction of an audit and guides development of the detailed plan.
- Overhead absorptionOverhead absorption charges production overhead from cost centres to products, jobs or services using an absorption rate and an activity measure.
- Overhead absorption rateAn overhead absorption rate is overhead cost divided by the quantity of the chosen absorption base.
- Overhead allocationOverhead allocation assigns an entire overhead item to the cost centre or cost object responsible for it.
- Overhead apportionmentOverhead apportionment divides a shared overhead item between cost centres using a reasonable basis reflecting use or benefit.
- Overhead control accountAn overhead control account records actual overhead incurred and overhead absorbed into output.
- Overhead reapportionmentOverhead reapportionment transfers service-centre costs to the production centres benefiting from their work.
- Overtime payOvertime pay is remuneration for hours worked beyond the employee’s normal hours under the applicable terms.
- Overtime premiumOvertime premium is the additional rate above normal basic pay for overtime hours.
- OvertradingOperating at a scale that cannot be supported by the business's available finance, creating cash pressure despite potentially profitable sales.
- Owner changes in equityOwner changes in equity are changes arising from transactions with owners acting in their capacity as owners.
- Owner-occupied propertyOwner-occupied property is property held for use in producing or supplying goods or services or for administrative purposes.
P
- PBIT (profit before interest and tax)Profit before interest and tax is profit before finance interest and income tax, used in ratios such as interest cover.
- PEST analysisPEST analysis examines political, economic, social and technological factors in an organisation’s external environment.
- PESTEL analysisPESTEL examines political, economic, social, technological, environmental and legal influences in the wider external environment.
- POPIT modelThe POPIT model considers people, organisation, processes and information technology together when analysing business change.
- Pac-Man defenceA Pac-Man defence occurs when a takeover target responds by seeking to acquire the bidder.
- Paid-up capitalPaid-up share capital is the nominal amount of issued share capital paid by shareholders.
- Par valueNominal or par value is the stated face amount of a share or debt instrument.
- ParentA parent is an entity that controls another entity, its subsidiary.
- Part disposal allowable expenditure (UK capital gains)The allocation of eligible whole-asset cost to the part of an asset disposed of.
- Part exchangeA part exchange uses an existing asset as part of the consideration for a replacement.
- Partial goodwill methodThe partial goodwill method measures qualifying non-controlling interests at their proportionate share of the acquiree’s identifiable net assets at acquisition.
- Partner salaryA partner salary is an agreed allocation of partnership profit to a partner, often recognising work performed before sharing the residual profit.
- Partnership agreementA partnership agreement sets out the partners’ rights and responsibilities and how the business’s results are shared.
- Partnership trading profit allocation (UK tax)The allocation of a partnership’s tax-adjusted trading result to its partners under the relevant sharing arrangements.
- PartnershipsA partnership is an arrangement in which persons carry on a business together and share outcomes under their agreement and applicable law.
- Partners’ capital accountsPartners’ capital accounts record each partner’s capital interest.
- Partners’ current accountsPartners’ current accounts record drawings and profit allocations separately from fixed capital.
- Passing of risk under the CISGCISG passing-of-risk rules determine when the buyer bears relevant loss or damage risk, subject to the contract and Convention.
- Passive stakeholderA passive stakeholder does not currently seek active participation in the organisation’s decisions or activities under the active–passive classification.
- Past dueA financial asset is past due when a counterparty has failed to make a payment by its contractual due date.
- Past service costPast service cost is the change in the present value of a defined benefit obligation for employee service in prior periods resulting from a plan amendment or curtailment.
- Pay As You Earn (UK)PAYE is HMRC’s system for collecting income tax and National Insurance through payroll.
- PayableA payable is an amount owed to another party; trade payables normally arise from credit purchases.
- Payables control accountThe payables control account summarises total trade payables in the general ledger and is reconciled to supplier balances.
- Payables ledgerThe payables ledger contains individual supplier accounts showing invoices, payments, credits and balances.
- Payables payment periodThe payables payment period estimates how long a business takes to pay its trade suppliers.
- Payables reconciliationA payables reconciliation compares the business’s record of an amount owed to a supplier with the supplier’s statement.
- Payback periodThe time needed for cumulative undiscounted project cash inflows to recover the initial investment.
- PayrollPayroll is the process and records used to calculate employee earnings, deductions, net pay and the employer’s related staff costs.
- Payroll control accountA payroll control account summarises payroll amounts and their settlement so the employer can reconcile earnings, deductions, employer contributions and payments.
- Payroll liabilitiesPayroll liabilities are unpaid amounts arising from payroll, including net pay due to employees, deductions withheld for third parties and employer contributions due.
- Payroll system controlsPayroll system controls are procedures that authorise, process, record and safeguard payroll transactions and related information.
- Pecking order theoryA theory that businesses tend to prefer internal funds, then debt, and use new external equity when other suitable sources are insufficient.
- Peer-to-peer lendingBorrowing arranged through a platform that connects borrowers with investors or lenders, subject to the platform's lending structure.
- Penetration pricingPenetration pricing uses a relatively low price to build demand or market share, potentially supporting scale, network effects or entry into a market.
- Pension annual allowance charge (UK income tax)A tax charge that can arise when pension input exceeds the available annual allowance.
- Pension contribution tax relief (UK)Income-tax relief for eligible pension contributions, delivered according to the pension arrangement and applicable limits.
- Pension costPension cost is an expense or other accounting amount arising from an employer’s employee benefit arrangements.
- PerceptionPerception is the process through which people interpret information and form an understanding of a situation.
- Perfect competitionPerfect competition is a market model with many buyers and sellers, a homogeneous product, adequate information and free entry and exit.
- Performance PyramidThe Performance Pyramid links corporate vision and business objectives with operational performance measures at progressively lower levels.
- Performance and rewardPerformance and reward systems link recognition or remuneration to selected achievements.
- Performance appraisalPerformance appraisal evaluates a person or unit against relevant objectives and evidence, with feedback and decisions about development, recognition or accountability.
- Performance hierarchyA performance hierarchy connects mission and corporate goals with business-unit, functional and operational objectives and measures.
- Performance informationPerformance information describes an organisation’s results against objectives or measures, using financial or non-financial indicators.
- Performance information auditAn audit of performance information evaluates information reported about an organisation’s performance against specified criteria.
- Performance managementPerformance management links objectives, plans, measures, evaluation and actions to improve organisational outcomes.
- Performance materialityPerformance materiality is an amount or amounts set below financial-statement materiality to reduce to an appropriately low level the probability that uncorrected and undetected misstatements together exceed overall materiality.
- Performance measurementPerformance measurement quantifies or otherwise assesses results and drivers of results against the organisation’s objectives.
- Performance obligationA performance obligation is a promise in a customer contract to transfer a distinct good or service, or a qualifying series of distinct items.
- Performance obligation satisfied over timeA performance obligation is satisfied over time when one of IFRS 15’s specified criteria is met, so revenue is recognised as progress occurs.
- Performance planning gapA performance planning gap is the difference between the desired future performance and the forecast result from the current strategy or plans.
- Performance report narrativeA performance report narrative explains significant results, causes, uncertainty and recommended actions in language suited to the user’s decision.
- Performance standardA performance standard specifies an expected or required level of achievement against which actual performance can be assessed.
- Performance system reviewPerformance system review evaluates whether the organisation’s measures, reports, incentives and controls remain useful as its strategy and operating conditions change.
- Performing (team development)Performing is the stage in Tuckman’s model where the team works relatively effectively towards its task, using established relationships and suitable working arrangements.
- Period costA period cost is charged to the period’s profit calculation rather than carried forward in product inventory.
- Period of account (UK corporation tax)The period for which a company prepares its accounts.
- Periodic inventory reviewPeriodic review checks the inventory position at fixed intervals and decides replenishment then, often ordering enough to reach a target level.
- Periodic inventory review systemA periodic inventory review system checks inventory at scheduled intervals and determines the replenishment quantity at each review.
- Periodic inventory systemA periodic inventory system determines closing inventory at period end, normally using a physical count and valuation, rather than continuously updating a detailed inventory balance for every movement.
- Periodic weighted average costPeriodic weighted average cost assigns a common unit cost based on the cost and quantity of goods available over a period.
- Permanent audit fileA permanent audit file holds information of continuing relevance to successive audits, such as constitutional documents and long-term contracts.
- Permanent working capitalThe minimum continuing investment in current assets needed to sustain a business's ongoing operations.
- PerpetuityA series of equal cash flows at regular intervals continuing indefinitely.
- Person cultureA person culture, in Handy’s typology, places the individual members and their professional autonomy at the centre.
- Person specificationA person specification states the job-related knowledge, skills, experience or other capabilities required of someone performing a role.
- Personal allowance (UK income tax)The personal allowance is an amount of income an eligible individual can receive without paying income tax.
- Personal development planA personal development plan records the capabilities a person aims to develop, the actions and resources required, a timetable and how progress will be assessed.
- PersonalityPersonality concerns patterns of thinking, feeling and behaviour associated with an individual across situations.
- Personality assessmentA personality assessment collects and interprets information about patterns or preferences in thinking, feeling or behaviour.
- Personality traitA personality trait describes a relatively consistent tendency in thoughts, feelings or behaviour, such as sociability or conscientiousness.
- Pervasive effectsPervasive effects are effects on the financial statements, or possible effects where evidence is insufficient, that are not confined to specific elements, represent a substantial proportion, or are fundamental to users’ understanding in relation to disclosures.
- Petty cash bookA petty cash book records small cash payments, often under an imprest system that restores the float to an agreed amount.
- Physical capital maintenancePhysical capital maintenance treats profit as earned only when physical productive capacity at the end of the period exceeds capacity at the beginning, excluding owner transactions.
- Piecework remunerationPiecework remuneration pays according to the quantity of acceptable output, using a specified rate per unit.
- Piercing the corporate veil (English law)Piercing the corporate veil means disregarding a company’s separate personality in narrowly defined circumstances.
- Placement, layering and integrationPlacement, layering and integration are common ways to describe how criminal proceeds enter and move through the financial system and reappear as apparently legitimate funds.
- PlacingAn issue or sale of securities to a selected group of investors rather than a general public offer.
- PlanningPlanning sets objectives, considers alternatives and determines actions and resources for future activity.
- Planning varianceA planning variance isolates the effect of changing an original standard or budget assumption to a justified revised benchmark.
- Poison-pill rights planA poison-pill rights plan uses specified shareholder rights and triggers to make an unwanted control acquisition more difficult or costly.
- Political and legal environmentThe political and legal environment comprises government institutions, policies, political conditions and applicable legal arrangements that influence an organisation.
- Political hot boxA political hot box is a service with high public or political support but a weak ability to serve effectively in the public sector portfolio matrix.
- Political riskPolitical risk concerns uncertainty arising from political conditions, government decisions or related policy changes that could affect an organisation.
- Politically exposed personA politically exposed person is an individual entrusted with a prominent public function under the applicable anti-money-laundering framework.
- Porter’s DiamondPorter’s Diamond examines how a location’s business environment supports competitiveness in particular industries.
- Porter’s Five ForcesPorter’s Five Forces analyses industry competitive pressure through rivalry, threat of entrants, threat of substitutes, buyer power and supplier power.
- Porter’s Value ChainPorter’s Value Chain analyses how linked primary and support activities contribute to customer value and competitive advantage.
- Porter’s generic strategiesPorter’s generic strategies describe competing through cost leadership or differentiation and through broad or focused market scope.
- Porter’s value systemPorter’s value system connects an organisation’s value chain with the value chains of suppliers, distribution channels and buyers.
- Portfolio betaThe value-weighted average of the component investments' betas, under a consistently defined portfolio and market benchmark.
- Portfolio diversificationCombining investments so that imperfectly related outcomes reduce the concentration of risk.
- Positive confirmation requestA positive confirmation request asks the confirming party to respond directly to the auditor whether it agrees or disagrees with the information, or to provide requested information.
- Positive feedbackPositive feedback reinforces a change through a loop in which its consequences produce more change in the same direction.
- Post-acquisition organisational integrationPost-acquisition organisational integration coordinates the acquired and acquiring organisations so that the intended strategy can operate effectively.
- Post-acquisition price/earnings valuationAn estimate of combined equity value using maintainable post-acquisition earnings and a justified post-transaction P/E multiple.
- Post-acquisition profitsPost-acquisition profits are profits accumulated by a subsidiary after the parent obtains control, subject to consolidation adjustments.
- Post-employment benefitsPost-employment benefits are employee benefits, other than termination benefits and short-term employee benefits, payable after employment ends.
- Post-implementation reviewA post-implementation review evaluates how an implemented change is working in operation and whether its intended improvements and benefits are emerging.
- Post-project reviewA post-project review examines the conduct and delivery of a project to identify achievements, problems and lessons for future work.
- Postponed import VAT accounting (UK)Accounting for eligible import VAT on a VAT return rather than paying it at import.
- Potential ordinary shareA potential ordinary share is a financial instrument or other contract that may entitle its holder to ordinary shares.
- Potentially exempt transfer (UK inheritance tax)A qualifying lifetime transfer that becomes exempt if the donor survives seven years.
- PowerPower in consolidation arises from existing rights that give an investor the current ability to direct the investee’s relevant activities, meaning those that significantly affect returns.
- Power (organisations)Power in an organisation is the capacity to influence decisions, behaviour or outcomes.
- Power cultureA power culture, in Handy’s typology, concentrates influence around a central individual or small group.
- Power distancePower distance concerns the extent to which less powerful members of a society accept and expect unequal distributions of power in Hofstede’s framework.
- Pre-acquisition profitsPre-acquisition profits are a subsidiary’s accumulated profits included in its net assets when the parent obtains control.
- Pre-incorporation contractA purported company contract made before the company legally exists.
- Pre-registration input VAT (UK)VAT incurred before registration that may be recoverable if the relevant conditions are met.
- Pre-trading expenditure relief (UK)Relief for eligible trade expenses incurred before a trade begins.
- Preconditions for an auditPreconditions for an audit include management’s use of an acceptable financial reporting framework and its agreement to acknowledge specified responsibilities, including preparing the statements, maintaining necessary control and providing access to information and persons.
- Preference dividends in earnings per sharePreference dividends attributable to equity preference shares can reduce earnings attributable to ordinary shareholders in the basic EPS numerator.
- Preference share costThe return required by holders of preference shares, calculated from the instrument's promised or expected distributions and market value.
- Preference sharesPreference shares normally carry preferential rights over ordinary shares, often to dividends and repayment on winding up.
- PrepaymentsA prepayment is the portion of an incurred payment or recorded obligation relating to goods or services to be received after the reporting date.
- Present obligationA present obligation is a duty or responsibility that exists at the reporting date as a result of past events.
- Presentation and disclosure assertionsPresentation and disclosure assertions concern whether relevant information is appropriately described, classified and disclosed in accordance with the applicable framework.
- Presentation currencyPresentation currency is the currency in which financial statements are presented.
- Prevention costPrevention costs are incurred to avoid quality failures before they occur.
- Price discriminationPrice discrimination charges different prices for a similar underlying product or service to distinguishable customer groups or circumstances, not solely because of corresponding cost differences.
- Price elasticity of demandPrice elasticity of demand measures the responsiveness of quantity demanded to price changes: percentage change in quantity divided by percentage change in price, on the specified calculation basis.
- Price skimmingPrice skimming sets a relatively high initial price to capture value from buyers willing to pay more, often followed by lower prices as market conditions change.
- Price-based competitive strategyA price-based competitive strategy uses the price offered relative to alternatives as a significant basis for attracting customers.
- Price/earnings ratioThe price/earnings ratio is the market price per ordinary share divided by earnings per ordinary share on a consistent basis.
- Price/earnings valuationEstimating equity value by applying an appropriate price/earnings multiple to maintainable earnings attributable to ordinary shareholders.
- Price–earnings ratioThe price–earnings ratio compares a share’s market price with earnings per share on a consistent basis.
- Pricing decisionA pricing decision selects price and related commercial terms in light of costs, customer value, demand, competitors, capacity and strategy.
- Primary activities (Porter’s value chain)Primary activities in Porter’s value chain concern creating, delivering, selling and supporting the offering.
- Primary marketThe market in which newly issued securities are sold to investors, raising finance for the issuer under the transaction's terms.
- Primary sectorThe primary sector covers activities obtaining natural resources, such as agriculture, fishing, forestry and mineral extraction.
- Primary stakeholderA primary stakeholder, in Clarkson’s classification, belongs to a group whose continuing participation is essential to the organisation’s survival.
- Prime costPrime cost is the total of direct materials, direct labour and direct expenses for a cost object.
- Principal and agent in a customer contractA principal controls a specified good or service before transferring it to the customer; an agent arranges for another party to provide it.
- Principal budget factorThe principal budget factor is the main constraint limiting the organisation’s planned activity during the budget period.
- Principal marketThe principal market is the market with the greatest volume and level of activity for the asset or liability that the entity can access.
- Principles-based and rules-based accountingPrinciples-based and rules-based describe different emphases in how reporting requirements are developed and applied.
- Principles-based governancePrinciples-based governance sets broad expectations for responsible direction and accountability and requires judgment about how to achieve them in the organisation’s circumstances.
- Prior-period errorA prior-period error is an omission or misstatement arising from failure to use, or misuse of, reliable information available when prior statements were authorised.
- PrioritisationPrioritisation ranks tasks or objectives so that attention and resources go to the most important work.
- Private Residence Relief (UK capital gains)Relief for qualifying gains on disposal of a dwelling that has been an individual’s only or main residence.
- Private equityInvestment, typically by specialist funds or investors, in equity of businesses that are not publicly traded or that are taken private.
- Private sectorThe private sector comprises organisations outside government ownership or control under the relevant classification.
- Proactive CSR strategyA proactive CSR strategy anticipates social and environmental responsibilities and takes action before being forced by criticism or regulation.
- Probabilistic budgetingProbabilistic budgeting considers budget outcomes with probabilities reflecting uncertainty in assumptions.
- Probability of defaultAn estimate of the likelihood that a borrower or counterparty will default within a specified period.
- Probable outflow of resourcesA probable outflow of resources means an outflow is more likely than not to be required to settle an obligation.
- Process costingProcess costing accumulates costs for a continuous or repetitive production process producing similar units, then assigns costs to output and any work in progress.
- Process theories of motivationProcess theories of motivation examine how people’s perceptions, expectations or comparisons influence their decisions about effort and behaviour.
- Processing controlA processing control checks that accepted data is processed accurately and completely through an application.
- ProcurementProcurement is the process of obtaining goods or services, from identifying requirements and selecting suppliers through ordering, receipt and payment.
- Product costA product cost is cost assigned to units of output for the specified purpose and method.
- Product developmentProduct development offers new or substantially changed products or services to an existing market.
- Product life cycleThe product life cycle describes a product’s market development through stages commonly labelled introduction, growth, maturity and decline.
- Product riskProduct risk concerns adverse consequences associated with a product’s design, quality, performance, safety or suitability for users.
- Product-line pricingProduct-line pricing sets related prices across a range of products or service tiers, considering differences in customer value, features, costs and interaction between offerings.
- Production budgetA production budget states the units to be manufactured to meet planned sales and desired finished-goods inventory, allowing for opening inventory.
- Production costProduction cost is the cost of making goods or providing the production activity being costed.
- Production orientationProduction orientation emphasises efficient output, availability and cost in the belief that customers will favour products they can obtain affordably.
- Production volume ratioThe production volume ratio compares standard hours for actual output with budgeted hours: standard hours produced ÷ budgeted hours × 100%.
- ProductivityProductivity measures output achieved relative to an input used, such as units per labour hour or orders processed per employee.
- Professional behaviourProfessional behaviour requires compliance with relevant laws and regulations and conduct consistent with the profession’s responsibility to act in the public interest.
- Professional bodyA professional body develops and supports a profession through qualifications, competence standards, ethical expectations and services for its members.
- Professional competence and due careProfessional competence and due care require a professional accountant to attain and maintain appropriate knowledge and skill and act diligently in accordance with applicable standards.
- Professional coreThe professional core is the continuing group of essential employees in Handy’s shamrock organisation.
- Professional indemnity insuranceProfessional indemnity insurance provides cover, subject to policy terms, for specified claims arising from professional services.
- Professional judgementProfessional judgement is the application of relevant training, knowledge and experience to make informed decisions appropriate to the circumstances of an audit.
- Professional liabilityProfessional liability is the potential legal responsibility arising from a practitioner’s work, determined under applicable law and the engagement circumstances.
- Professional negligenceProfessional negligence is a failure to meet the applicable standard of professional care where the other legal elements needed for liability are established.
- Professional scepticismProfessional scepticism is an attitude that includes a questioning mind, alertness to conditions indicating possible misstatement and a critical assessment of evidence.
- Professional scepticism impairmentProfessional scepticism can be impaired by factors such as overconfidence, confirmation bias, time pressure or excessive trust in management.
- Professional skillsProfessional skills are the capabilities used to apply knowledge and judgment effectively in work, including communicating clearly, analysing information, questioning assumptions and evaluating alternatives in context.
- ProfessionalismProfessionalism is the use of appropriate knowledge, skill, judgment and ethical conduct in carrying out a role.
- ProfitProfit is income less expenses for a stated period under the relevant accounting basis.
- Profit analysisProfit analysis examines how revenue, costs and margins change and why.
- Profit before financing and income taxesProfit before financing and income taxes is an IFRS 18 subtotal comprising operating profit and amounts in the investing category.
- Profit before income taxesProfit before income taxes is the period’s profit after income and expenses other than the income tax expense have been included.
- Profit centreA profit centre is a responsibility unit whose manager is accountable for both revenue and relevant costs, and therefore a measure of profit.
- Profit marginA profit margin compares a specified profit measure with revenue, multiplied by 100.
- Profit maximisationSeeking the greatest accounting profit under a specified measure and time horizon.
- Profit-maximising priceUnder a differentiable single-product model, an interior profit maximum occurs where marginal revenue equals marginal cost, provided the relationship actually produces a maximum and all constraints are satisfied.
- Profit-sharing ratioA profit-sharing ratio specifies how partners divide the relevant residual profit or loss.
- Profit-sharing remunerationEmployee profit-sharing remuneration gives employees a defined share of a specified profit measure under an agreed scheme.
- Profit-volume chartA profit-volume chart plots profit or loss directly against sales activity.
- ProfitabilityProfitability is an entity's ability to generate profit relative to a base such as revenue or capital employed.
- Profitability indexA ratio relating an investment's value to the capital it uses; the precise numerator must be stated.
- Profitability ratiosProfitability ratios relate profit to a measure such as revenue, capital employed or equity to help assess financial performance.
- Profits available for distributionAccumulated realised profits available under company law after the statutory deduction for accumulated realised losses.
- ProjectA project is a temporary undertaking organised to deliver specified outputs or achieve defined objectives under constraints.
- Project benefitA project benefit is a measurable favourable outcome arising from using the project’s outputs.
- Project closureProject closure formally brings a project to an end, whether after planned delivery or an authorised early termination.
- Project constraintsProject constraints are the limits and requirements within which a project must operate.
- Project durationThe present-value-weighted average time at which a project's specified future positive cash flows are received.
- Project executionProject execution carries out the authorised work to produce and deliver the project’s outputs.
- Project initiationProject initiation establishes the project’s purpose, objectives, high-level scope, justification, governance and initial delivery arrangements.
- Project initiation documentA project initiation document brings together the agreed information and arrangements needed to authorise and manage a project.
- Project life cycleA project life cycle describes the phases through which a project develops from its initial idea or definition to delivery and closure.
- Project managementProject management applies planning, coordination, monitoring and control to deliver a project’s agreed objectives within the relevant constraints.
- Project managerThe project manager coordinates and manages the work needed to deliver the project’s agreed objectives within delegated authority.
- Project monitoring and controlProject monitoring and control compares progress and forecasts with agreed objectives and baselines, investigates significant differences and supports corrective action or authorised change.
- Project planA project plan sets out how the project’s objectives and deliverables will be achieved and controlled.
- Project scopeProject scope defines what the project will deliver and the boundaries of the work required.
- Project sponsorThe project sponsor provides senior ownership and governance of a project’s business justification.
- Project-specific cost of capitalA required return matched to the project's business risk and appropriate financing assumptions.
- Projected unit credit methodThe projected unit credit method attributes defined benefit obligations to periods of employee service using actuarial assumptions.
- Prompt-payment discount (UK VAT)A conditional price reduction whose VAT treatment depends on the amount actually paid.
- Property business loss carry-forward (UK individual)A loss carried forward against later profits of the same property business.
- Property income cash basis (UK individuals)A basis of computing property-business income using receipts and payments when they occur.
- Property, plant and equipmentProperty, plant and equipment are tangible assets held for use in production, supply, rental or administration and expected to be used over more than one period.
- Proportionate liabilityProportionate liability is a legal approach under which a defendant’s liability for a loss may be limited to the share attributable to that defendant’s responsibility, where the applicable law permits.
- Prospective financial informationProspective financial information consists of financial information based on assumptions about events that may occur and possible actions by an entity.
- ProspectusA formal disclosure document for an eligible securities offering or admission, subject to the applicable legal framework.
- Provision movement reconciliationA provision movement reconciliation explains changes between opening and closing provision balances.
- ProvisionsA provision is a liability of uncertain timing or amount, recognised when a present obligation from a past event, probable outflow and reliable estimate exist.
- Proxy betaA beta estimated from a comparable business and adjusted to help assess systematic risk for a different project or entity.
- PrudencePrudence is caution when making judgements under uncertainty, supporting neutrality.
- Psychologically close manager (Fiedler)A psychologically close manager, in the Fiedler teaching framework, places relatively strong emphasis on relationships and tends to favour informal contact.
- Psychologically distant manager (Fiedler)A psychologically distant manager, in the Fiedler teaching framework, places relatively strong emphasis on tasks and tends to use formal relationships.
- Psychometric assessmentPsychometric assessment uses structured instruments to assess psychological characteristics such as ability, aptitude or personality.
- Public and private companies (UK)UK company law distinguishes public companies from private companies, with different rules on public offers of securities.
- Public interestActing in the public interest means recognising responsibilities to the wider community affected by professional work, alongside legitimate obligations to an employer or client.
- Public interest entityA public interest entity is an entity designated as such under applicable professional, legal or regulatory definitions because of the public interest in its financial condition.
- Public offer of securitiesAn offer of securities to investors through a public offering process under applicable rules and transaction terms.
- Public sectorThe public sector comprises government and entities controlled or otherwise classified as part of government under the relevant framework.
- Public sector governancePublic sector governance provides direction, oversight and accountability for public organisations within the relevant constitutional and legal arrangements.
- Public sector portfolio matrixThe public sector portfolio matrix analyses services through their ability to serve effectively and their public or political support and funding attractiveness.
- Public sector starA public sector star is a service combining a strong ability to deliver effectively with high public or political support in the public sector portfolio matrix.
- Public-sector budgetingPublic-sector budgeting allocates and controls resources to support public objectives within relevant funding, legal and accountability arrangements.
- Public-sector financial reporting conceptual frameworkThe IPSASB Conceptual Framework provides concepts for general-purpose financial reporting by public-sector entities.
- Public-sector targetA public-sector target states a desired service, output, outcome or resource result for a public body.
- Pull supply chain modelA pull supply chain model triggers relevant production or replenishment from actual demand signals rather than relying solely on forecasts.
- Purchase day bookThe purchases day book lists credit purchases of goods for resale from supplier invoices.
- Purchase orderA purchase order is a buyer's request or commitment to purchase specified goods or services on stated terms.
- Purchase requisitionA purchase requisition is an internal request for goods or services, identifying the need, quantity and other requirements for approval.
- Purchase returns day bookThe purchases returns day book records returns of goods previously bought on credit, usually supported by supplier credit notes.
- Purchased or originated credit-impaired financial asset (IFRS 9)A purchased or originated credit-impaired asset is a financial asset already credit-impaired on initial recognition.
- Purchases system controlsPurchases system controls govern ordering, receiving, recording and paying for goods and services.
- Purchasing mixThe purchasing mix brings together the criteria used to obtain suitable inputs, commonly price, quality, quantity and delivery in introductory purchasing analysis.
- Purchasing power parityA model relating exchange-rate changes to differences in inflation between countries.
- Push supply chain modelA push supply chain model schedules activity mainly in anticipation of demand, using forecasts to produce or replenish before specific customer requirements arrive.
- Put optionAn option giving its holder the right to sell the specified underlying asset at the exercise price under the contract's terms.
- Put-call parityA no-arbitrage relationship between matching European call and put values, the underlying asset and the present value of the exercise price.
Q
- Qualified opinionA qualified opinion is a modified audit opinion used when misstatements are material but not pervasive, or when sufficient appropriate evidence cannot be obtained and the possible effects are material but not pervasive.
- Qualifying charitable donation (UK corporation tax)A qualifying company donation deductible from total profits in the relevant accounting period.
- Qualitative characteristics of useful financial informationQualitative characteristics are the attributes that make financial information useful to its intended users.
- Qualitative dataQualitative data describes qualities, categories or experiences rather than amounts measured numerically.
- Qualitative performance informationQualitative performance information describes characteristics, experiences or judgments rather than only numerical counts.
- QualityQuality concerns how well a product, service or process meets relevant requirements and customer needs, not simply the highest grade or most expensive features.
- Quality assuranceQuality assurance concerns planned, systematic arrangements that provide confidence that quality requirements will be met.
- Quality certificationQuality certification provides written assurance from an external certification body that a defined product, service or system meets specified requirements within the certificate’s scope.
- Quality controlQuality control uses operational methods and checks to meet quality requirements and identify non-conformance.
- Quality costsQuality costs are commonly grouped into prevention, appraisal or detection, internal failure and external failure.
- Quality management systemA quality management system is the linked policies, processes, responsibilities and evidence used to direct and control an organisation regarding quality.
- Quantity discountA quantity discount reduces unit purchase price when a specified order quantity or volume condition is met.
- Quick ratio (acid test)The acid test, or quick, ratio assesses short-term liquidity after excluding inventory from current assets.
- Quota samplingQuota sampling selects observations to meet specified category counts without necessarily using random selection within each category.
- QuotationA quotation states a proposed price and often terms for goods or services before an order is placed.
R
- RPIXRPIX is the UK Retail Prices Index excluding mortgage interest payments.
- Random samplingSimple random sampling selects a sample so each possible sample of a specified size has an equal chance under the selection procedure.
- Random selection in audit samplingRandom selection uses a chance-based method to select sampling units.
- Random variationRandom variation is the irregular component of a time series not explained by the model’s systematic components.
- Random-walk model of pricesA random-walk model describes a price process whose changes contain unpredictable innovations under specified assumptions.
- Ratio analysisRatio analysis uses relationships between financial figures to assess performance, financial position and trends.
- Ratio analysis in auditRatio analysis compares related financial figures to help identify relationships, trends and potential audit risks.
- Raw materialsRaw materials are materials held for use in production before they have been incorporated into work in progress.
- Reactive CSR strategyA reactive CSR strategy changes behaviour mainly after external pressure or public criticism arises.
- Real cash flowA cash flow expressed in purchasing-power units of a chosen base date rather than in future money amounts.
- Real optionThe value of a genuine managerial right to change an investment decision as uncertainty is resolved.
- Real-wage unemploymentReal-wage unemployment describes unemployment in a labour-market model where real wages are held above the level that would equate labour supplied and demanded.
- Realisable valueRealisable value is an amount expected to be obtained from disposing of an asset; its exact meaning depends on the measurement context.
- Reasonable assuranceReasonable assurance is a high, but not absolute, level of assurance.
- Reasonableness testA reasonableness test is an analytical procedure that develops an independent expectation for an amount using relevant relationships, then compares it with the recorded amount.
- RecalculationRecalculation checks the mathematical accuracy of documents or records, manually or using automated tools.
- ReceiptA receipt acknowledges that money or another payment has been received.
- ReceivableA receivable is an amount due to an entity from another party; trade receivables usually arise from credit sales.
- Receivables collection periodReceivables collection period estimates collection time: trade receivables divided by annual revenue or credit sales, multiplied by 365 days. Use the denominator required by the paper or question.
- Receivables control accountThe receivables control account summarises trade receivable movements in the general ledger and is reconciled to customer ledger balances.
- Receivables ledgerThe receivables ledger holds separate customer accounts for credit sales, receipts and credit notes.
- Receivables reconciliationA receivables reconciliation compares the seller’s receivable records with relevant customer records or other evidence and explains the differences.
- Receivables turnoverReceivables turnover is a ratio showing how many times credit receivables are collected relative to credit sales during a period.
- RecessionA recession is a significant contraction in economic activity across an economy.
- Reciprocal reapportionmentReciprocal reapportionment recognises services that service centres provide to each other before distributing their fully loaded costs to production.
- Reclassification adjustmentA reclassification adjustment is an amount reclassified to profit or loss in the current period that was previously recognised in other comprehensive income.
- Recognised qualifying bodyA recognised qualifying body is a UK body recognised to offer an applicable statutory audit qualification.
- Recognised supervisory bodyA recognised supervisory body is a UK body recognised to register and supervise statutory auditors and audit firms under the applicable legal framework.
- Recognition criteriaRecognition criteria are the conditions an applicable accounting requirement uses to determine whether an item is recorded in a financial statement.
- Recognition in financial reportingRecognition is the process of capturing an item that meets the definition of an asset, liability, equity, income or expense in the statement of financial position or financial performance.
- Recognition of an intangible assetRecognition of an intangible asset means recording an identifiable non-monetary asset without physical substance when the applicable IAS 38 recognition requirements are met.
- Recognition of property, plant, and equipmentPPE is recognised when future economic benefits are probable and cost can be measured reliably.
- ReconciliationA reconciliation compares two records of the same underlying balance and explains the differences.
- Reconciling itemsReconciling items explain the difference between two records of the same balance at a given date.
- Recording internal controlsRecording internal controls documents how relevant processes and controls operate, using methods such as narrative notes, flowcharts or questionnaires.
- Recoverable amountRecoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use, as determined under IAS 36.
- Recovered irrecoverable debtA recovered irrecoverable debt is money received from a customer after the receivable was previously written off.
- RecoveryAn economic recovery is a phase in which activity improves after a downturn.
- Recovery rateThe proportion of exposure expected or actually recovered following a credit default, under a specified measurement basis.
- RecruitmentRecruitment attracts a suitable pool of applicants for an identified role or capability need.
- Recruitment policyA recruitment policy sets principles and responsibilities for identifying staffing needs and attracting suitable applicants.
- Recruitment services to an audit clientRecruitment services can create independence threats when an audit firm helps an audit client hire personnel, especially for influential positions.
- Recurring audit engagementA recurring audit engagement is an audit performed for an entity for a successive reporting period after an earlier engagement.
- Redeemable debtDebt whose principal is contractually repayable at a specified date or according to a repayment schedule.
- Redeemable preference sharesRedeemable preference shares require or permit repayment of capital under specified terms.
- Reducing-balance depreciationReducing balance depreciation applies a constant percentage to the asset’s opening carrying amount, normally producing larger charges early and smaller charges later.
- Redundancy (Great Britain)A dismissal attributable to a business closure, workplace closure or reduced need for employees to do work of a particular kind.
- Referent powerReferent power is influence arising from identification with, admiration for or a desire to be associated with another person or group.
- Refinancing riskThe risk that finance cannot be renewed or replaced when required, or can be replaced only on unfavourable terms.
- Reimbursement of a provisionA reimbursement of a provision is an amount expected from another party for some or all expenditure required to settle a recognised provision.
- Related and supporting industries (Porter’s Diamond)Related and supporting industries in Porter’s Diamond concern capable suppliers and connected industries that help firms develop competitive strength.
- Related diversificationRelated diversification expands into activities that share useful resources, capabilities, technologies or market connections with the existing business.
- Related partyA related party is a person or entity related to the reporting entity under the applicable accounting standard, including specified relationships involving control, joint control, significant influence or key management personnel.
- Related party transactionA related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.
- Relative market shareRelative market share compares an organisation’s or product’s share with that of a specified competitor, commonly the largest relevant competitor.
- RelevanceRelevant information is capable of making a difference to users' decisions through predictive value, confirmatory value or both.
- Relevant cash flowA future cash flow that changes because a proposed decision is taken.
- Relevant costA relevant cost changes between the alternatives in a decision and relates to future resources or cash consequences rather than merely a historical accounting charge.
- Relevant ethical requirementRelevant ethical requirements are the independence and professional conduct obligations that apply to the engagement, including applicable professional codes and law.
- Relevant labour costRelevant labour cost is the future labour consequence that changes with a decision.
- Relevant material costRelevant material cost reflects the future consequence of using material for the option under consideration.
- Relevant rangeThe relevant range is the activity interval over which the assumptions in a cost-behaviour model are expected to hold.
- Relevant-cost pricingRelevant-cost pricing uses the changed future costs and benefits of an order or option to identify a short-run financial boundary for a price decision.
- Reliable estimate of a provisionA reliable estimate of a provision is an amount that can be measured sufficiently reliably to recognise a present obligation under IAS 37.
- Remittance adviceRemittance advice accompanies or describes a payment and identifies the invoices or other items being settled.
- Removal of a director by members (UK)The statutory power of company members to remove a director by ordinary resolution at a meeting, subject to required procedure.
- Removal of an auditorRemoval of an auditor is termination of an auditor’s appointment by the appropriate party under applicable law and governance procedures.
- Remuneration committeeA remuneration committee supports governance of executive pay and related reward policy within its specified remit.
- Rent-a-room relief (UK, 2025–26)A relief for qualifying furnished accommodation let in a person’s main home.
- Reorder levelThe reorder level is the inventory position at which replenishment should be initiated.
- Repayment of a government grantRepayment of a government grant is accounted for as a change in accounting estimate under IAS 20.
- ReperformanceReperformance involves the auditor independently executing a procedure or control originally performed by the entity.
- Replacement of an asset componentReplacement component expenditure is expenditure on replacing part of an existing item of property, plant and equipment.
- Report to management on control deficienciesA report to management communicates audit findings or control deficiencies and, where appropriate, their consequences and recommended actions.
- Reportable segmentA reportable segment is an operating segment or aggregation of segments that must be disclosed separately under IFRS 8.
- Reporting periodThe reporting period is the interval covered by performance and cash-flow statements; the reporting date is its end.
- Repurchase agreementA transaction combining a sale of securities with an agreement to repurchase them on specified terms, commonly used as secured short-term finance.
- Reputational riskReputational risk is the possibility that adverse perceptions of an organisation will damage trust, relationships or its ability to achieve objectives.
- ResearchResearch is original and planned investigation undertaken to gain new scientific or technical knowledge.
- Research and developmentResearch seeks new knowledge; development applies research or knowledge to a plan for new or substantially improved products or processes before commercial production.
- ReserveA reserve is a component of equity other than share capital, such as retained earnings, share premium or revaluation surplus.
- Residence nil rate band (UK inheritance tax)An additional inheritance-tax threshold potentially available when a qualifying home passes to direct descendants on death.
- Residential property finance-cost tax reduction (UK)A basic-rate income-tax reduction for qualifying residential-property finance costs of an individual landlord.
- Residual dividend policyA policy of funding acceptable investment and financing needs first, then distributing available residual funds subject to applicable constraints.
- Residual incomeResidual income is a defined profit less a notional capital charge on the investment supporting it.
- Residual loss (agency)Residual loss in agency theory is the reduction in the principal’s welfare that remains because the agent’s decisions still differ from those that would best serve the principal, despite monitoring and bonding arrangements.
- Residual partnership profitResidual partnership profit or loss is the amount remaining for allocation in the agreed profit-sharing ratio after other appropriations.
- Residual riskResidual risk is the exposure remaining after considering the risk responses and controls actually in place.
- Residual valueResidual value is the estimated amount the entity would currently obtain from disposing of an asset, after estimated disposal costs, if the asset were already of the age and condition expected at the end of its useful life.
- Resistance to changeResistance to change is behaviour or concern that slows, challenges or opposes a proposed alteration.
- Resource powerResource power arises from control over resources that others need, such as budgets, information, capacity or access to facilities.
- ResponsibilityResponsibility is a duty to carry out an activity or fulfil an obligation.
- Responsibility accountingResponsibility accounting organises plans, results and reports around areas for which particular managers are accountable.
- Responsible party in assuranceThe responsible party is the party responsible for the underlying subject matter in an assurance engagement.
- Restricted grant fundsRestricted grant funds are funding subject to conditions or limits on how the recipient may use it.
- Restructuring provisionA restructuring provision is a provision for direct expenditures necessarily entailed by a restructuring when an IAS 37 present obligation exists.
- Retail Prices IndexThe Retail Prices Index is a UK consumer-price measure with coverage and methods differing from CPI and CPIH.
- Retained earningsRetained earnings are accumulated profits and losses retained in the business after distributions and other relevant transfers.
- Retrospective applicationRetrospective application applies a new accounting policy as if it had always been applied to transactions and events.
- Retrospective restatementRetrospective restatement corrects the recognition, measurement and disclosure of amounts in prior-period financial statements as if a prior-period error had never occurred, subject to applicable standards and practicability requirements.
- Return on capital employed (ROCE)Return on capital employed (ROCE) is a specified profit before financing costs divided by capital employed, multiplied by 100%.
- Return on equity (ROE)Return on equity compares profit attributable to ordinary shareholders with equity, usually expressed as a percentage.
- Return on investmentReturn on investment compares a defined profit with the investment base supporting it, expressed as a percentage.
- Revaluation model for intangible assetsThe IAS 38 revaluation model measures a recognised intangible asset using fair value determined by reference to an active market.
- Revaluation of non-current assetsUnder the IAS 16 revaluation model, an asset class is carried at fair value at revaluation less subsequent depreciation and impairment.
- Revaluation surplusA revaluation surplus is an equity component that normally records an upward revaluation recognised in other comprehensive income.
- RevenueRevenue is income arising in the course of an entity's ordinary activities, such as sales to customers.
- Revenue acquisition synergyAn incremental revenue-related benefit expected from combining businesses, compared with their stand-alone prospects.
- Revenue centreA revenue centre is a responsibility unit whose manager is primarily accountable for generating revenue rather than for a full profit or asset base.
- Revenue expenditureRevenue expenditure is expenditure charged to profit or loss for the period because it does not qualify for recognition as an asset.
- Revenue incomeRevenue income is an informal term for recurring income arising in ordinary activities; the nature of the activity determines its classification.
- Reversal of impairment lossA reversal increases an impaired asset’s carrying amount when IAS 36’s conditions for reversal are met, subject to a ceiling; goodwill impairment is not reversed.
- Reverse takeoverA transaction in which an unlisted business gains a public listing through a combination with an already listed company, depending on the transaction's legal structure and rules.
- Review engagementA review engagement provides limited assurance rather than the reasonable assurance ordinarily obtained in a financial-statement audit.
- Revised standardA revised standard is an updated benchmark used when justified information indicates the original planning assumption was inappropriate or conditions changed.
- Reward powerReward power is influence based on the perceived ability to provide valued outcomes.
- RibaA prohibited form of interest or stipulated increase in an exchange or financing arrangement under applicable Islamic principles.
- Right-of-use assetA right-of-use asset represents a lessee’s right to use an underlying asset over the lease term.
- Rights and obligations assertionRights and obligations concern whether the entity holds or controls rights to reported assets and whether reported liabilities are obligations of the entity.
- Rights issuesA rights issue offers existing shareholders the opportunity to buy new shares, generally in proportion to their current holdings.
- RiskRisk, in general management, concerns how uncertainty can affect objectives, with favourable or adverse consequences.
- Risk acceptanceRisk acceptance retains an exposure rather than avoiding it or introducing further treatment.
- Risk appetiteRisk appetite is the amount and type of risk an organisation or stakeholder is willing to accept in pursuing objectives.
- Risk assessment (business)Business risk assessment identifies relevant risks, analyses their nature and significance and evaluates them against appropriate criteria.
- Risk assessment proceduresRisk assessment procedures obtain evidence to identify and assess risks of material misstatement at financial-statement and assertion levels.
- Risk attitudeRisk attitude describes a decision-maker’s preferences for uncertain outcomes, considering the balance of upside and downside rather than expected value alone.
- Risk aversionA preference for a certain outcome over an uncertain outcome with the same expected value, under the stated decision framework.
- Risk avoidanceRisk avoidance chooses not to start, or to discontinue, an activity that gives rise to an exposure.
- Risk awarenessRisk awareness is an understanding of relevant uncertainties, warning signs and their possible effects on objectives.
- Risk capacityRisk capacity is the maximum exposure an organisation can bear given its resources, obligations and other constraints.
- Risk committeeA risk committee supports board oversight of risk within an agreed remit.
- Risk cultureRisk culture comprises the shared attitudes, values and behaviours that influence how people identify, discuss and respond to risk.
- Risk heat mapA risk heat map displays risks against categories such as likelihood and impact to help prioritise discussion and action.
- Risk identificationRisk identification finds and describes uncertainties, events or conditions that could affect objectives.
- Risk managementRisk management is the process of identifying, assessing and responding to risks that could affect an organisation’s objectives, and monitoring the effectiveness of those responses.
- Risk managerA risk manager coordinates and supports the organisation’s risk-management process through expertise, reporting, challenge and monitoring.
- Risk of management biasManagement bias is a lack of neutrality by management in preparing information, including accounting estimates.
- Risk of material misstatementThe risk of material misstatement is the risk that financial statements are materially misstated before audit.
- Risk ownerA risk owner is the person or role accountable for monitoring a particular risk and ensuring that an appropriate response is developed, implemented and reviewed.
- Risk perceptionRisk perception is a person’s or group’s interpretation of a risk’s likelihood, impact and significance.
- Risk reductionRisk reduction introduces measures intended to lower the likelihood or consequences of an exposure.
- Risk registerA risk register is a structured record used to communicate and monitor risks and their management.
- Risk responseAn audit risk response is the action designed to address an assessed risk of material misstatement, including overall responses and further procedures at assertion level.
- Risk toleranceRisk tolerance specifies acceptable variation or exposure around an objective or risk criterion.
- Risk transferRisk transfer or sharing allocates specified consequences of a risk to another party through an arrangement such as insurance, a contract or a partnership.
- Risk-adjusted discount rateA discount rate selected to reflect the risk of the cash flows being valued.
- Risk-based auditingRisk-based auditing uses identified and assessed risks of material misstatement to direct the nature, timing and extent of audit procedures.
- Risk-free rateThe return used in a model for an investment with no relevant uncertainty over the specified nominal payoff and period.
- Risk–return trade-offThe relationship in which taking additional relevant risk generally requires an investor to expect additional return, rather than guaranteeing it.
- Role cultureA role culture, in Handy’s typology, coordinates work through formal roles, procedures and established authority.
- Role theoryRole theory examines how expectations associated with social or organisational positions influence behaviour.
- Rolling budgetA rolling budget maintains a specified future horizon by adding a new period as the earliest period expires.
- RoyaltyA royalty is a payment for specified rights to use an asset or resource, commonly intellectual property, under an agreement.
- Rule-of-thumb estimateA rule-of-thumb estimate uses a simple practical guideline to produce an approximate answer.
- Rules-based governanceRules-based governance uses specified requirements to prescribe or constrain conduct and arrangements.
S
- SAF strategy evaluationSAF evaluates a strategic option through suitability, acceptability and feasibility.
- SERVQUALSERVQUAL evaluates perceived service quality by comparing customer perceptions with expectations across tangibles, reliability, responsiveness, assurance and empathy.
- SMART objectiveA SMART objective is framed to be specific, measurable, achievable, relevant and time-bound, using the common interpretation of the acronym.
- SOFRA US dollar overnight benchmark measuring the cost of cash borrowing secured by US Treasury securities.
- SONIAA sterling overnight interest benchmark based on eligible unsecured wholesale deposit transactions.
- SUM functionSUM adds the numerical values in a specified spreadsheet range.
- SWOT analysisSWOT organises strategic factors into internal strengths and weaknesses and external opportunities and threats.
- Sale and leasebackA sale and leaseback is a transaction in which an entity transfers an asset to another party and leases that asset back.
- Sales budgetA sales budget states the planned quantities, selling prices and resulting revenue for the period, often analysed by product, market or month.
- Sales day bookThe sales day book records credit sales of goods or services using sales invoices.
- Sales mixSales mix is the relative proportion of products or services in total sales, measured on the basis specified, such as units or revenue.
- Sales mix varianceThe sales mix variance measures the profit or contribution effect of actual products sold in proportions different from the budget mix, holding actual total sales units constant.
- Sales orderA sales order records the seller's accepted customer order and its terms.
- Sales orientationSales orientation emphasises persuading customers to buy the organisation’s existing offerings through selling effort and promotion.
- Sales price varianceThe sales price variance measures the revenue effect of actual selling price differing from standard for the actual quantity sold.
- Sales quantity varianceThe sales quantity variance measures the effect of total actual sales units differing from budget while retaining the budget sales mix.
- Sales returns day bookThe sales returns day book records goods returned by credit customers and other relevant credits, usually from credit notes.
- Sales system controlsSales system controls govern the authorisation, processing, recording and collection of sales transactions.
- Sales tax and VATSales tax is a tax charged on taxable supplies under applicable rules, normally collected from customers for the tax authority.
- Sales to net working capital ratioSales revenue divided by the specified net working-capital balance, indicating the sales supported by each unit of working-capital investment.
- Sales volume varianceThe sales volume variance measures the effect of actual units sold differing from budgeted units, valued at the standard unit profit or contribution appropriate to the costing system.
- Sampling populationA sampling population is the entire set of data from which an auditor selects a sample and about which the auditor intends to draw conclusions.
- Sampling riskSampling risk is the risk that the auditor’s conclusion based on a sample may differ from the conclusion reached if the same procedure were applied to the entire population.
- Sampling selection methodsSampling selection methods determine how items are chosen from an audit population.
- Sampling unitA sampling unit is an individual item constituting a population for sampling purposes.
- Sarbanes-Oxley ActThe Sarbanes-Oxley Act of 2002 is United States legislation addressing aspects of corporate reporting, oversight and accountability.
- Savings income nil rate band (UK)A nil-rate band for savings income whose amount depends on the taxpayer’s rate category.
- Savings interest arising (UK income tax)The tax-year timing of taxable interest when it arises to an individual.
- Scalar chainThe scalar chain is the formal line of authority connecting the highest and lowest organisational levels.
- Scatter diagramA scatter diagram plots paired numerical observations to examine their relationship.
- Scenario planningScenario planning explores plausible alternative future conditions and their implications for decisions.
- Schein’s levels of cultureSchein’s levels distinguish observable artefacts, espoused beliefs and values, and underlying assumptions.
- Scientific managementScientific management is Frederick Taylor’s approach to improving work through systematic study of tasks, specified methods, suitable selection and training, and cooperation between management and workers.
- Scope 1 greenhouse gas emissionsDirect greenhouse gas emissions from sources owned or controlled by the reporting entity.
- Scope 2 greenhouse gas emissionsIndirect greenhouse gas emissions from the generation of purchased or acquired energy consumed by the reporting entity.
- Scope 3 greenhouse gas emissionsIndirect greenhouse gas emissions, other than Scope 2, that occur in the reporting entity’s upstream and downstream value chain.
- Scrip dividendA dividend satisfied through an issue of additional shares rather than an immediate cash payment, under the arrangement's terms.
- Seasonal tradingSeasonal trading occurs when sales, costs, cash flows or working-capital balances vary predictably during the year.
- Seasonal unemploymentSeasonal unemployment reflects predictable changes in labour demand at particular times of year, such as tourism or harvest-related activity.
- Seasonal variationSeasonal variation is a recurring pattern linked to a regular calendar period.
- Secondary marketThe market in which investors trade securities that have already been issued.
- Secondary ratiosSecondary ratios are supporting measures used to explore the drivers behind broader performance ratios.
- Secondary sectorThe secondary sector transforms materials or components into products and includes manufacturing and construction in a common introductory classification.
- Secondary stakeholderA secondary stakeholder, in Clarkson’s classification, can affect or be affected by the organisation without its participation being essential to immediate organisational survival.
- Security token offeringAn offering of digital tokens representing specified investment or security rights under applicable law and transaction documents.
- Segment informationSegment information explains the performance and other specified information about an entity’s reportable operating segments.
- Segregation of dutiesSegregation of duties assigns incompatible responsibilities to different people to reduce opportunities for error or fraud.
- SelectionSelection evaluates applicants against relevant criteria and chooses whom to appoint.
- Selection interviewA selection interview obtains and assesses evidence about an applicant’s suitability for a role through questions and discussion.
- Self Assessment (UK)Self Assessment is a system HMRC uses to collect Income Tax using tax returns.
- Self Assessment late-payment penalty (UK)A penalty that can arise when Self Assessment tax remains unpaid after prescribed dates.
- Self Assessment payments on account (UK)Payments on account are advance instalments towards an individual’s next Self Assessment tax bill.
- Self-constructed assetA self-constructed asset is an asset an entity builds for its own use rather than buying as a completed item.
- Self-interest threatA self-interest threat arises when a financial or other interest could inappropriately influence a professional accountant’s judgement or behaviour.
- Self-review threatA self-review threat arises when a professional accountant may not appropriately evaluate a previous judgement or work performed by the accountant or the firm on which the current engagement relies.
- Sell-out rightA sell-out right allows a qualifying minority holder to require an acquirer to purchase the holder’s shares under defined conditions.
- Seller obligations under the CISGThe CISG seller must deliver the goods, hand over related documents and transfer property as required by the contract and Convention.
- Selling overheadSelling overhead consists of indirect costs of generating sales, such as advertising, sales management and shared sales-office support.
- Semi-strong efficiencyMarket efficiency with respect to all publicly available information, including past trading data and published business information.
- Semi-structured dataSemi-structured data contains markers or fields that organise information without a rigid tabular schema for every record.
- Semi-variable costA semi-variable cost contains a fixed component and a variable component within the relevant activity range.
- Sensitivity analysisTesting how a change in an input affects an outcome, often finding the change that would reduce a project's NPV to zero.
- Sensor (control system)A sensor in a control-system model supplies information about the actual state or output to be compared with a reference.
- Separate corporate personalityA company with separate corporate personality is a legal person distinct from its owners and those who manage it.
- Separate financial statementsSeparate financial statements are those presented by an entity in addition to, or in specified circumstances instead of, consolidated or equity-accounted statements.
- Separate vehicle in a joint arrangementA separate vehicle is a separately identifiable financial structure, including a separate legal entity or an entity recognised by statute, regardless of legal personality.
- Separately acquired intangible assetA separately acquired intangible asset is an identifiable non-monetary asset without physical substance acquired outside a business combination and initially measured at cost.
- ServiceA service is an activity or performance provided to satisfy a need or want rather than the transfer of a tangible item alone.
- Service auditorA service auditor is an auditor who reports, at the request of the service organisation, on controls at that organisation.
- Service characteristicsService characteristics commonly include intangibility, heterogeneity, inseparability of production and consumption, and perishability of unused capacity.
- Service costingService costing measures the cost of delivering a service using units reflecting the output provided.
- Service inseparabilityService inseparability describes situations where producing and consuming a service are closely connected and the provider or customer participates in its delivery.
- Service intangibilityService intangibility means that much of a service’s value is a performance or experience that cannot be inspected like a physical product before purchase.
- Service level agreementA service level agreement specifies expected service, measures, responsibilities, reporting and escalation between a provider and customer or organisational units.
- Service marketingService marketing develops and communicates an offer whose value substantially comes from activities or performance rather than ownership of a physical good.
- Service organisationA service organisation provides services to user entities that may be relevant to their information systems and financial reporting controls.
- Service perishabilityService perishability means that unused service capacity for a particular time cannot normally be stored and sold later as that same time-bound opportunity.
- Service qualityService quality concerns how well a service meets relevant customer or stakeholder requirements.
- Service variabilityService variability describes differences in service performance between providers, customers, occasions or delivery conditions.
- Settlement discountA settlement discount, also called a cash or prompt-payment discount, reduces the invoice amount if the customer meets stated payment conditions.
- Settlement of an obligationSettlement is the discharge of an obligation, for example by paying cash, transferring another asset or providing services.
- Seven-year accumulation (UK inheritance tax)The use of relevant earlier chargeable transfers in determining the tax on a later transfer.
- Shadow priceA shadow price is the change in the optimal objective value from a one-unit relaxation of a constraint, within the range for which the current marginal relationship remains valid.
- Shamrock organisationA shamrock organisation uses three broad workforce groups: a permanent professional core, a flexible workforce and external contractors.
- Share allotment and pre-emption (UK)Allotment gives a person an unconditional right to be included in the register of members for shares.
- Share buybackA transaction in which a company purchases its own shares, subject to applicable law and the terms of the programme.
- Share capitalShare capital is the amount recognised in equity for shares issued by a company, commonly their nominal or par value in basic FA questions.
- Share identification rules (UK individuals)Share identification rules match shares disposed of with acquisitions in a prescribed order before computing an individual’s gain.
- Share identification rules for companies (UK)Rules matching shares disposed of by a company to acquisitions and its share pool.
- Share optionA share option gives its holder the right, but not the obligation, to buy or subscribe for shares at a specified price during a specified period.
- Share premium accountShare premium is the excess of the issue price over nominal value on shares issued, recorded within equity.
- Share takeover and reorganisation (UK capital gains)A qualifying share exchange can carry the original shares’ cost into replacement shares.
- Share warrantA right issued by a company to subscribe for its shares at specified terms within a stated period.
- Share-based paymentA share-based payment transaction involves an entity receiving goods or services in exchange for equity instruments or amounts based on the value of its equity instruments, under IFRS 2.
- Share-for-share offerAn acquisition offer in which the bidder offers its own shares in exchange for target shares.
- Shared servicesShared services consolidate recurring support activities for several organisational units into a service operation.
- ShareholderA shareholder is a person or entity that holds shares in a company.
- Shareholder activismShareholder activism is the use of share ownership and related influence to seek changes in a company’s governance, strategy or conduct.
- Shareholder value analysisShareholder value analysis examines how strategic and operating choices affect the value available to shareholders, often through expected cash flows, investment needs, risk and financing effects.
- Shareholder wealth maximisationSeeking to increase the economic value of shareholders' investment, considering cash flows, their timing and risk.
- ShareholdersShareholders own shares in a company and hold rights determined by the class of shares and applicable law.
- Shift premiumA shift premium is additional remuneration for working a specified shift, such as nights, rather than simply for exceeding normal hours.
- Short-lease premium (UK property income)A payment for a short lease, part of which may be assessed as the landlord’s property income.
- Short-life asset election (UK capital allowances)An election to track a qualifying plant or machinery asset in a separate pool.
- Short-term bank loanBank borrowing with repayment due over a relatively short agreed period, commonly within a year.
- Short-term cash investmentPlacing temporarily unneeded cash in suitable instruments while preserving the ability to meet expected and unexpected payments.
- Short-term employee benefitsShort-term employee benefits are employee benefits, other than termination benefits, expected to be settled wholly before twelve months after the end of the annual reporting period in which employees provide the related service.
- Short-term leaseA short-term lease is a lease with a lease term of twelve months or less at the commencement date and no purchase option.
- Short-termismShort-termism prioritises immediate measured results at the expense of longer-term value or organisational objectives.
- ShortageA shortage occurs when quantity demanded exceeds quantity supplied at a particular price and time.
- Shutdown decisionA shutdown or discontinuance decision compares the contribution lost with costs genuinely saved and other changed consequences.
- Significant deficiency in internal controlA significant deficiency in internal control is a deficiency or combination of deficiencies that, in the auditor’s professional judgement, is of sufficient importance to merit the attention of those charged with governance.
- Significant financing componentA significant financing component arises when the timing of customer payment provides the customer or the entity with a significant benefit of financing the transfer of goods or services.
- Significant influenceSignificant influence is the power to participate in an investee’s financial and operating policy decisions without controlling or jointly controlling them.
- Significant riskA significant risk is an identified risk of material misstatement for which the assessment is close to the upper end of the inherent-risk spectrum, or which must be treated as significant under another ISA.
- Simulation modelA model that imitates a system or process to explore outcomes under specified assumptions.
- Six Is of e-marketingThe six-Is framework examines how digital marketing differs from traditional approaches through interactivity, intelligence, individualisation, integration, industry structure and independence of location.
- Six SigmaSix Sigma is a structured, data-based approach to reducing process variation and defects relative to customer requirements.
- Six capitals (integrated reporting)The six capitals classify resources and relationships relevant to value: financial, manufactured, intellectual, human, social and relationship, and natural.
- Slack resourceSlack is the unused amount under an upper-bound constraint: available resource less the amount used by the solution.
- Small and medium-sized entityAn SME is an entity classified as small or medium for a stated economic, reporting, financing or legal purpose.
- Small entityA small entity is an organisation whose scale or complexity is limited in the relevant context.
- Small gifts exemption (UK inheritance tax)An inheritance-tax exemption for qualifying outright gifts up to a specified annual amount per recipient.
- Smith ReportThe Smith Report was UK guidance published in 2003 on the role of audit committees.
- Social and demographic trendsSocial and demographic trends are patterns of change in population characteristics, ways of living, attitudes and behaviour.
- Social and relationship capitalSocial and relationship capital concerns the relationships, trust and shared practices that support activity and cooperation in integrated reporting.
- Social auditA social audit examines aspects of an organisation’s social practices or impacts against selected criteria.
- Social classSocial class describes categories of social position associated with factors such as occupation, income, wealth, education and family background.
- Soft capital rationingA limit on investment expenditure imposed within an organisation rather than directly by an external capital market.
- Software development costsSoftware development costs are expenditure incurred to develop software for internal use or sale.
- Sole traderA sole trader is an individual carrying on business on their own account.
- Sole trader (UK)A sole trader operates a business as an individual and is personally responsible for its debts.
- Solvency ratiosSolvency ratios are measures used to assess an entity’s capacity to meet longer-term obligations and support its financing structure.
- Sources of financeThe internal and external means by which an organisation obtains funds for its activities and investment.
- Span of controlSpan of control is the number of people reporting directly to a manager.
- Special purpose acquisition companyA company formed to raise capital from investors with the aim of acquiring an operating business later.
- Special resolutionA members’ resolution requiring the statutory special-resolution threshold and applicable procedural requirements.
- Special-purpose vehicleAn entity established for a specific financing or transaction purpose, with legal and economic relationships defined by its documents.
- SpecialisationSpecialisation concentrates effort or resources on a particular activity, function, product or area of expertise.
- Split-off pointThe split-off point is the stage at which outputs from a joint process become separately identifiable.
- Spot exchange rateA spot exchange rate is the exchange rate for immediate delivery of one currency in exchange for another.
- Spouse or civil partner exemption (UK inheritance tax)An inheritance-tax exemption for qualifying transfers between spouses or civil partners, subject to statutory conditions and limits.
- SpreadsheetA spreadsheet organises data in a grid of cells and can calculate and analyse values.
- Spreadsheet cellA spreadsheet cell is the intersection of a row and a column.
- Spreadsheet formattingSpreadsheet formatting controls how cell contents are displayed.
- Spreadsheet formulaA spreadsheet formula computes a result from values, references or functions.
- Spreadsheet macroA macro automates a sequence of spreadsheet operations.
- Spreadsheet row and columnRows run horizontally and columns vertically in a spreadsheet grid.
- Squeeze-out rightA squeeze-out right allows a qualifying acquirer to require remaining holders to transfer their shares under defined legal conditions and safeguards.
- Staff costsStaff costs include gross employee earnings and the employer’s own related contributions and other employment costs required by the facts.
- StagflationStagflation combines significant inflation with weak or stagnant real economic activity, often accompanied by high unemployment.
- StakeholderA stakeholder is a person or group with an interest in, or affected by, an organisation’s activities and decisions.
- Stakeholder activismStakeholder activism involves organised efforts to influence an organisation’s conduct, decisions or wider policy.
- Stakeholder claimA stakeholder claim is an interest, expectation, demand or asserted right arising from an organisation’s relationship or effects on a stakeholder.
- Stakeholder legitimacyStakeholder legitimacy concerns whether a relationship or claim is regarded as valid or appropriate under relevant legal, ethical and social expectations.
- Stakeholder mappingStakeholder mapping assesses relevant groups by factors such as power and interest to guide engagement and understand their influence on strategy and performance.
- Stakeholder theoryStakeholder theory considers an organisation’s relationships with groups and individuals who affect or are affected by its activities.
- Stand-alone selling priceThe stand-alone selling price is the price at which an entity would sell a promised good or service separately to a customer.
- Standard costA standard cost is a predetermined cost for a defined unit of output or activity under stated conditions.
- Standard costingStandard costing records or analyses output using predetermined resource quantities and prices and compares them with actual results through variances.
- Standard deviationStandard deviation is the square root of variance and measures dispersion in the original units of the data.
- Standard hourA standard hour is the amount of work expected to be performed in one hour under the specified standard.
- Standard of proof (England and Wales)The degree of certainty required to prove a fact in legal proceedings.
- Standard operation sheetA standard operation sheet describes the work, equipment, sequence and standard resource requirements for a production operation.
- Standard product specificationA standard product specification states the required characteristics of a product, such as its materials, dimensions, functionality and quality.
- Standing data controlA standing data control restricts and checks changes to relatively stable information used repeatedly by a system.
- Statement of Recommended PracticeA Statement of Recommended Practice is sector-specific guidance that supplements relevant UK reporting, auditing or actuarial requirements for particular activities or industries.
- Statement of cash flowsA statement of cash flows reports changes in cash and cash equivalents during a period, classified into operating, investing and financing activities.
- Statement of changes in equityThe statement of changes in equity reconciles each equity component from opening to closing balance.
- Statement of financial positionThe statement of financial position reports recognised assets, liabilities and equity at a specific date.
- Statement of profit or lossThe statement of profit or loss reports income and expenses for a period and the resulting profit or loss, using applicable presentation categories and subtotals.
- Statement of profit or loss and other comprehensive incomeThe statement of profit or loss and other comprehensive income presents income and expenses for the period, separating profit or loss from other comprehensive income.
- Static trade-off theoryA view that financing policy balances the benefits of debt, especially tax relief, against expected costs associated with financial distress and other disadvantages.
- Statistical samplingStatistical sampling uses random selection and probability theory to evaluate sample results, including sampling risk.
- Statutory auditA statutory audit is an audit required by applicable law or regulation.
- Step-down reapportionmentStep-down reapportionment distributes service-centre costs in a chosen sequence.
- Stepped fixed costA stepped fixed cost stays constant within a band of activity, then changes when another resource block is needed.
- Stepwise method of multi-level consolidationThe stepwise method of multi-level consolidation builds intermediate group amounts before incorporating them into the ultimate group.
- StewardshipStewardship is the responsible management of resources entrusted to a person or organisation, together with reporting on their use.
- Stock exchangeA stock exchange provides an organised venue or system for trading specified securities under its market arrangements.
- Stock exchange introductionAdmission of existing shares to a market without necessarily issuing new shares or raising new capital at that time.
- Stockout costStockout cost is the consequence of not having inventory when required.
- Stores ledgerA stores ledger records material receipts, issues, returns and balances, usually including quantities and values for each inventory item.
- Storming (team development)Storming is the stage in Tuckman’s model associated with differences over tasks, roles, influence or ways of working becoming more visible.
- Straight debtStraight debt is borrowing without an embedded right to convert the debt into the issuer’s equity.
- Straight-line depreciationStraight-line depreciation allocates an equal amount of the depreciable amount to each full year of useful life when benefits are consumed evenly.
- Strategic allianceA strategic alliance is a cooperative arrangement between organisations pursuing shared strategic benefits while retaining their separate identities.
- Strategic analysisStrategic analysis examines the organisation’s environment, resources, capabilities and stakeholder expectations to understand its position and options.
- Strategic apexThe strategic apex is the senior leadership responsible for overall direction and the organisation’s relationship with its wider environment in Mintzberg’s model.
- Strategic capabilityStrategic capability is the resources and competences an organisation can use to pursue its strategy and compete or fulfil its purpose.
- Strategic changeStrategic change alters an organisation’s direction or the capabilities and arrangements needed to deliver its strategy.
- Strategic choiceStrategic choice evaluates and selects options to pursue the organisation’s objectives in light of its environment, capabilities, stakeholders and risks.
- Strategic driftStrategic drift occurs when an organisation’s strategy changes too slowly or in an unsuitable direction as its environment changes, creating a widening mismatch.
- Strategic management accountingStrategic management accounting uses relevant financial and non-financial information to support longer-term competitive choices, value creation and implementation.
- Strategic performance dashboardA strategic performance dashboard presents selected measures and context so users can identify significant progress, risks and action needs against strategic objectives.
- Strategic planningStrategic planning considers the organisation’s longer-term direction, objectives and choices in light of its environment and capabilities.
- Strategic riskStrategic risk is uncertainty affecting an organisation’s strategic choices or its ability to achieve strategic objectives.
- StrategyStrategy sets the organisation’s direction and choices about how to achieve its objectives and create value in its environment.
- Strategy implementationStrategy implementation turns chosen direction into coordinated actions, resources, systems, responsibilities and behaviour.
- Strategy mapA strategy map depicts proposed links between strategic objectives and performance drivers, often supporting a balanced scorecard.
- StratificationStratification divides a population into subpopulations with similar characteristics to improve sample design and focus.
- Stratified samplingStratified sampling divides a population into defined groups and samples within each group.
- Stress testingStress testing examines the consequences of specified adverse conditions for a position, business or financial plan.
- Strong-form efficiencyThe strongest efficiency proposition, under which prices reflect both public and private information.
- Structural unemploymentStructural unemployment arises from a persistent mismatch between available workers and the jobs demanded, for example in skills, location or occupational requirements.
- Structured dataStructured data is organised according to a defined schema, often in rows and columns.
- Structured entityA structured entity is an entity designed so that voting or similar rights are not the dominant factor in deciding who controls it.
- Structures and buildings allowance (UK)A straight-line capital allowance for qualifying non-residential structures and buildings.
- Sub-associateA sub-associate is an associate held through another entity in a group structure; the label describes the ownership path.
- Sub-subsidiaryA sub-subsidiary is a subsidiary controlled indirectly through another subsidiary in a group structure.
- Subject matter informationSubject matter information is the outcome of measuring or evaluating an underlying subject matter against criteria.
- SubleaseA sublease is a transaction in which a lessee re-leases an underlying asset to another party while the original head lease remains in effect.
- Subsequent events in auditSubsequent events include events between the date of the financial statements and the auditor’s report, and facts that become known to the auditor after the report date.
- Subsequent events proceduresBefore the auditor’s report date, the auditor performs procedures designed to obtain sufficient appropriate evidence that events requiring adjustment or disclosure have been identified.
- Subsequent expenditure on property, plant and equipmentSubsequent expenditure on property, plant and equipment is expenditure incurred after an item has been initially recognised.
- Subsequent receipt testingSubsequent receipt testing examines cash received after the reporting date to obtain evidence about receivables outstanding at that date.
- SubsidiaryA subsidiary is an entity controlled by another entity, the parent.
- Subsidiary acquired exclusively with a view to disposalA subsidiary acquired exclusively with a view to disposal may meet IFRS 5’s held-for-sale criteria, but it is not simply ignored in consolidation.
- Substance over formSubstance over form means depicting the economic reality of an arrangement rather than merely its legal label.
- Substantive analytical procedureA substantive analytical procedure develops an expectation of a recorded amount or ratio and compares it with the recorded figure to identify possible misstatement.
- Substantive procedureA substantive procedure is designed to detect material misstatements at the assertion level.
- Substitute productA substitute product or service meets a similar customer need through a different offering or approach.
- Succession planningSuccession planning prepares for future vacancies in key roles by identifying required capabilities, potential successors and development or recruitment actions.
- Sufficiency of audit evidenceSufficiency is the measure of the quantity of audit evidence.
- Suitability (strategy)Suitability assesses whether a strategic option addresses the organisation’s strategic position and objectives.
- Suitable criteriaSuitable criteria are the benchmarks used to measure or evaluate the underlying subject matter consistently and support a meaningful assurance conclusion.
- SukukCertificates representing specified interests in assets, usufruct, services or a qualifying investment arrangement, with returns determined by the structure.
- Sunk costA sunk cost has already been incurred and cannot be changed by the decision now being considered.
- SupervisionSupervision oversees and supports people’s immediate work to help achieve expected standards.
- Supplier statementA supplier statement lists transactions and the balance the supplier believes a customer owes at a date.
- Supplier statement reconciliationA supplier statement reconciliation compares a supplier’s statement with the entity’s purchase ledger to identify timing differences, errors or omitted liabilities.
- SupplySupply describes the quantities producers are willing and able to offer at different prices over a stated period, holding other relevant conditions constant.
- Supply chainA supply chain is the connected network of organisations and activities supplying inputs and delivering products or services to customers.
- Supply chain financeAn arrangement in which a finance provider pays approved supplier invoices early and the buyer pays the provider under agreed terms.
- Supply chain managementSupply chain management coordinates the activities and relationships needed to source inputs, create offerings and serve customers.
- Support activities (Porter’s value chain)Support activities in Porter’s value chain enable and improve activities across the organisation.
- Support staffSupport staff provide services that assist the organisation without directly producing its principal output in Mintzberg’s model.
- Surplus (market)A market surplus occurs when quantity supplied exceeds quantity demanded at a particular price and time.
- Surplus resourceSurplus in a linear-programming minimum constraint is the amount by which the solution exceeds the required minimum.
- Suspense accountA suspense account temporarily holds an unresolved difference or entry pending investigation and correction.
- SustainabilitySustainability concerns maintaining viable outcomes over time while considering environmental and social impacts and the governance and resources needed to support them.
- Sustainability assuranceSustainability assurance examines sustainability information against suitable criteria and reports a reasonable or limited assurance conclusion.
- Sustainability assurance criteriaSustainability assurance criteria are the benchmarks used to evaluate or measure the sustainability subject matter and prepare the information subject to assurance.
- Sustainability metric estimation uncertaintySustainability metric estimation uncertainty is the lack of precision in measuring reported sustainability information because inputs, models or future conditions are uncertain.
- Sustainability reportingSustainability reporting communicates information about an entity’s sustainability-related risks, opportunities, impacts or performance under an identified reporting framework.
- Sustainability-related risks and opportunitiesSustainability-related risks and opportunities are uncertainties or possibilities that can affect an entity’s prospects through its resources, relationships and activities.
- Sustainable dividend growthAn estimated long-run dividend growth rate supported by retained earnings and the return earned on reinvestment, under stable assumptions.
- SwapA derivative agreement in which parties exchange specified cash flows or currency amounts according to agreed terms.
- SwaptionAn option giving its holder the right, but not the obligation, to enter a specified swap on agreed terms.
- Swim-lane process mapA swim-lane process map groups process activities by the person, team or organisation responsible for them.
- Switching costsSwitching costs are the money, time, effort, disruption or risk associated with changing supplier, system or offering.
- Synthetic agreement for foreign exchangeA cash-settled agreement referencing a forward-period currency relationship without necessarily exchanging the notional principal amounts.
- Systematic riskRisk arising from economy-wide or market factors that remains in a diversified investment portfolio.
- Systematic samplingSystematic sampling selects items at a regular interval after choosing a starting point.
- Systematic selection in audit samplingSystematic selection chooses items using a selection interval after an appropriate starting point.
- Systems control audit review fileA systems control audit review file, or SCARF, is associated with embedded audit software that selects and records information about transactions or system events for later audit review.
T
- TARA risk treatment modelTARA groups responses to a risk into transfer, avoid, reduce and accept.
- Tacit knowledgeTacit knowledge is practical understanding or know-how that is difficult to articulate fully and transfer through documents alone.
- Tactical planningTactical planning translates strategic aims into coordinated resource and activity plans for parts of the organisation.
- Takeover CodeThe Takeover Code is the Panel-administered framework of principles and rules for transactions and companies within its jurisdiction.
- Takeover board-neutrality ruleA takeover board-neutrality rule restricts specified target-board actions that could frustrate a bid without the required shareholder authority.
- Takeover breakthrough ruleA takeover breakthrough rule can neutralise specified transfer or voting restrictions in a control transaction under defined conditions.
- Talent managementTalent management coordinates how an organisation identifies, attracts, develops, deploys and retains the people and capabilities needed for its strategy.
- Tall organisationA tall organisation has relatively many hierarchical management levels between senior leadership and front-line work.
- Taper relief on lifetime transfers (UK inheritance tax)A reduction in tax on a qualifying lifetime transfer made more than three years before death.
- Tapered pension annual allowance (UK, 2025–26)A reduction of the pension annual allowance for an individual with sufficiently high threshold and adjusted income.
- Target costingTarget costing starts with a market-informed selling price and subtracts the required profit to establish allowable cost.
- Target profitTarget-profit analysis calculates the sales needed to cover fixed costs and earn a specified profit under the CVP assumptions.
- Target valuationEstimating the value of a business or its equity for a possible acquisition using stated assumptions and valuation methods.
- Task cultureA task culture, in Handy’s typology, organises influence and cooperation around completing work and solving problems.
- Tax avoidance and tax evasion (UK)Tax avoidance seeks an unintended tax advantage through arrangements; tax evasion involves deliberately concealing or misrepresenting information to reduce tax due.
- Tax baseThe tax base is the amount attributed to an asset or liability for tax purposes and is compared with its carrying amount to determine temporary differences.
- Tax cash flowA tax payment or saving that arises from the project's taxable income, deductions and other relevant tax consequences.
- Tax decision appeal (UK)A challenge to an HMRC tax decision through the applicable review and tribunal process.
- Tax year basis for trading profits (UK)The tax year basis generally assesses trading profits arising in the tax year, regardless of the accounting date.
- Tax-adjusted trading profit (UK)Tax-adjusted trading profit is trading profit calculated under applicable tax rules after required adjustments and reliefs.
- Tax-allowable depreciationA deduction for capital expenditure permitted when calculating taxable profit, according to the applicable tax rules or the assumptions in an exam question.
- Taxable profit (tax loss)Taxable profit or tax loss is the profit or loss for a period calculated under the rules of the relevant tax authority.
- Taxable temporary differenceA taxable temporary difference is a temporary difference that will result in taxable amounts when the carrying amount of an asset or liability is recovered or settled.
- TaxationIncome tax expense represents tax relating to taxable profit under applicable accounting rules and law.
- TeamA team is a group whose members coordinate interdependent contributions towards shared objectives or outputs.
- Team buildingTeam building develops the relationships, clarity and ways of working that help a team perform effectively.
- Team developmentTeam development improves a group’s ability to work together towards shared objectives.
- Team effectivenessTeam effectiveness is the extent to which a team achieves appropriate objectives through workable collaboration and can sustain its ability to perform.
- Technological unemploymentTechnological unemployment arises when changes in technology displace workers and they do not immediately move into other employment.
- Technology-based intangible assetA technology-based intangible asset is an identifiable intangible asset arising from technology-related rights or knowledge, such as qualifying acquired patents or software.
- TechnostructureThe technostructure comprises analysts who help design, plan or standardise how an organisation works in Mintzberg’s model.
- Temporary differenceA temporary difference is the difference between the carrying amount of an asset or liability and its tax base.
- Tender offerAn offer to purchase securities directly from holders on specified terms, subject to applicable rules.
- Terminal trade loss relief (UK individuals)A claim to relieve qualifying losses from the final 12 months of a trade against earlier profits of that trade.
- Terminal valueThe value at the end of an explicit forecast period of cash flows expected after that period.
- Terrorist financingTerrorist financing is the provision or collection of funds or other resources for terrorist activities as defined by applicable law.
- Tertiary sectorThe tertiary sector provides services, including activities such as retail, transport, hospitality and many professional services.
- Test dataTest data are artificial transactions entered into a system to determine how programmed controls process valid and invalid inputs.
- Test of controlsA test of controls evaluates whether a control operated effectively in preventing, or detecting and correcting, material misstatements at the assertion level.
- Tests of detailsTests of details are substantive procedures that examine individual transactions, balances or disclosures for material misstatement.
- Theoretical ex-rights priceThe theoretical share price immediately after a rights issue, based on combining the existing equity value and new subscription proceeds under simplifying assumptions.
- Theory X assumptionsTheory X assumptions portray people as generally disliking work, avoiding responsibility and needing direction, control or pressure to achieve organisational objectives.
- Theory Y assumptionsTheory Y assumptions recognise that people can find work satisfying, exercise self-direction and accept responsibility when conditions support commitment.
- Theory of constraintsThe theory of constraints focuses improvement on the factor currently restricting the organisation’s goal.
- ThetaA measure of an option value's sensitivity to the passage of time, holding other model inputs constant.
- Those charged with governanceThose charged with governance are the persons or organisations responsible for overseeing an entity’s strategic direction and accountability obligations, including financial-reporting oversight.
- Three-party assurance relationshipAn assurance engagement involves a practitioner, a responsible party and intended users.
- Threshold capabilityA threshold capability is a minimum resource or competence needed to participate credibly in a particular activity or market.
- Threshold competenceA threshold competence is an ability to perform an activity to the minimum standard needed for the organisation to compete or fulfil its purpose.
- Threshold resourceA threshold resource is an asset or other resource needed to participate credibly in a particular activity or market.
- Throughput accountingThroughput accounting supports short-run constraint management by focusing on throughput generated by scarce-resource time.
- Throughput accounting ratioThe throughput accounting ratio compares return per bottleneck time unit with operating cost per bottleneck time unit.
- Tick sizeThe smallest permitted price movement for a particular traded contract under its exchange's specifications.
- Time managementTime management is planning, prioritising and controlling the use of time to achieve worthwhile objectives.
- Time series analysisTime series analysis studies observations ordered over time to identify patterns and support forecasts.
- Time value of moneyThe principle that the value of a cash amount depends on when it is received or paid and on the appropriate rate.
- Time-based remunerationTime-based remuneration pays employees for time worked or for a contracted period, rather than directly per unit produced.
- TimelinessTimeliness means information is available to decision-makers in time to influence their decisions.
- Timing differences in bank reconciliationTiming differences in a bank reconciliation arise when the cash book and bank statement record the same item at different times.
- Tipping offTipping off concerns improper disclosure that could prejudice an investigation into suspected money laundering or other reportable activity.
- Tolerable misstatementTolerable misstatement is an amount set by the auditor for a sampling procedure to obtain an appropriate level of assurance that actual misstatement in a population does not exceed that amount.
- Tolerable rate of deviationThe tolerable rate of deviation is the rate of deviation from prescribed internal controls set by the auditor for a controls sampling procedure.
- Tone at the topTone at the top is the example set by senior leadership through its conduct, decisions and messages about values, ethics and acceptable behaviour.
- Top-down audit approachA top-down audit approach begins with the financial statements and entity-level matters, then considers significant accounts, disclosures, assertions and relevant controls in greater detail.
- Top-down budgetingTop-down budgeting sets major assumptions and targets centrally and communicates them to operating managers.
- Total comprehensive incomeTotal comprehensive income combines profit or loss for the period with other comprehensive income for that period.
- Total factory cost (throughput accounting)In the simplified throughput accounting model, total factory cost comprises the factory’s operating costs other than direct materials treated as the totally variable cost.
- Total quality managementTotal quality management is an organisation-wide approach to meeting customer requirements through prevention, continuous improvement and involvement across functions.
- Total shareholder returnThe return from dividends and share-price change over a period, expressed relative to the starting share value.
- Traceable profitTraceable profit deducts costs identifiable specifically with a division from the revenues attributable to it.
- Trade creditFinance provided when a supplier allows payment after goods or services are supplied.
- Trade discountA trade discount reduces the listed price at the time of sale, commonly for volume or commercial terms.
- Trade investmentIn basic group accounting, a simple or trade investment refers to an investment in another entity that is neither a subsidiary nor an associate.
- Trade payableA trade payable is an amount owed to a supplier for goods or services purchased on credit in the ordinary course of business.
- Trade receivableA trade receivable is an amount owed by a customer for goods or services sold on credit in the ordinary course of business.
- Trading loss relief for individuals (UK)Trading loss relief allows a qualifying individual’s trading loss to be used against specified income or future profits under applicable rules.
- Traditional capital structure theoryThe view that a moderate use of relatively cheap debt can lower WACC, but excessive gearing eventually raises financing costs and WACC.
- TrainingTraining develops knowledge, skills or behaviours needed for particular tasks or performance requirements.
- Training evaluationTraining evaluation assesses the outcomes and value of a training intervention against its purposes.
- Training needA training need is a relevant gap in knowledge, skills or behaviours that an appropriate learning intervention can address.
- Training needs analysisTraining needs analysis identifies relevant gaps between required capability and current knowledge, skills or behaviours.
- Training objectivesTraining objectives specify what learners should know or be able to do after an intervention and the standard expected.
- Training validationTraining validation checks whether a training programme achieves its specified learning or performance objectives.
- Trait approach to leadershipA trait approach examines characteristics associated with leadership, such as judgement, confidence or integrity.
- TrancheA class of securities or claims in a financing structure with specified payment priority and risk characteristics.
- Transaction dataTransaction data describes a particular business event, such as an invoice amount, quantity sold, receipt date or hours worked.
- Transaction in financial reportingA transaction in financial reporting is an event or exchange that has accounting consequences for an entity.
- Transaction priceTransaction price is the consideration an entity expects to be entitled to for transferring promised goods or services, excluding amounts collected for third parties.
- Transaction riskThe risk that exchange-rate movements change the home-currency value of a contractual or anticipated foreign-currency cash flow.
- Transactional leadershipTransactional leadership emphasises exchanges between leaders and followers, such as agreed performance expectations, contingent rewards and corrective action.
- Transfer of a business as a going concern (UK VAT)A qualifying business transfer treated as neither a supply of goods nor a supply of services for VAT.
- Transfer of control of goods or servicesTransfer of control occurs when a customer obtains the ability to direct the use of, and obtain substantially all remaining benefits from, a promised asset.
- Transfer pricingA transfer price is the charge for goods or services supplied between parts of the same organisation.
- Transfer to or from investment propertyA transfer to or from investment property occurs when a change in use is supported by evidence that the property meets or ceases to meet the IAS 40 definition.
- Transformational leadershipTransformational leadership seeks commitment to a shared purpose and encourages people to develop and contribute beyond routine exchanges.
- Translation of a foreign currency transactionTranslation of a foreign currency transaction converts its amount into the entity’s functional currency under IAS 21.
- Translation riskThe exposure of reported financial amounts to exchange-rate changes when foreign-currency results or balances are translated into a reporting currency.
- Transnational Auditors CommitteeThe Transnational Auditors Committee, or TAC, is the formal link between IFAC and the Forum of Firms and supports the Forum’s objectives and operations.
- Transnational auditA transnational audit involves financial reporting or audit circumstances that cross national borders.
- Transnational organisationA transnational organisation seeks global coordination and efficiency together with local responsiveness and cross-border learning.
- TransparencyTransparency is making relevant information understandable and accessible enough for others to assess decisions, conduct and performance.
- Transposition errorA transposition error swaps digits when recording an amount.
- Treasury billA short-term government debt instrument commonly issued or traded below its redemption amount rather than paying a periodic coupon.
- Treasury functionThe treasury function manages an entity’s cash, funding, liquidity, investments and related financial risks.
- Treasury sharesTreasury shares are an entity’s own equity instruments that it has reacquired and holds.
- TrendA trend is the underlying longer-term direction of a time series.
- Trend analysisTrend analysis compares financial amounts or ratios over successive periods to identify changes.
- Trial balanceA trial balance lists ledger balances at a date to test whether total debits equal total credits.
- True and fair presentationTrue and fair presentation describes financial statements that faithfully present relevant financial information in accordance with the applicable framework, in all material respects.
- True and fair viewA true and fair view is a financial reporting concept used in certain legal and reporting frameworks to describe the required quality of financial statements.
- Tucker’s five-question modelTucker’s model supports ethical evaluation by asking whether a proposed action is profitable, legal, fair, right and sustainable or environmentally sound.
- Tuckman’s team-development modelTuckman’s model describes group development through forming, storming, norming and performing.
- Turnbull ReportThe Turnbull Report was UK guidance issued in 1999 on directors’ responsibilities for internal control under the Combined Code.
- Twelve-month expected credit lossesTwelve-month expected credit losses are the portion of lifetime expected losses resulting from defaults possible within the next 12 months.
- Two-bin inventory systemA two-bin inventory system uses one quantity for normal consumption and a second quantity to cover use during replenishment, according to the system’s assumptions.
- Two-column cash bookA two-column cash book typically has separate cash and bank columns on both receipt and payment sides.
- Two-part transfer priceA two-part transfer price separates a per-unit charge from a fixed periodic payment between divisions.
- Two-tier boardA two-tier board structure separates a management board from a supervisory board.
- Type 1 and type 2 service-auditor reportsA type 1 service-auditor report addresses the description and design of controls at a specified date.
U
- UK Corporate Governance CodeThe UK Corporate Governance Code sets governance principles and provisions for relevant UK-listed companies using a comply-or-explain approach.
- UK residential property CGT payment on accountA payment and return generally due within 60 days of completing a taxable UK residential property disposal.
- UK strategic reportA UK strategic report is a narrative report required by UK company law for companies within the statutory scope, subject to applicable exemptions.
- US GAAPUS GAAP is the body of generally accepted accounting principles applicable to relevant entities reporting under the United States framework.
- Unavoidable costAn unavoidable cost remains under the alternatives being compared over the relevant decision period.
- UnbundlingSeparating a company's activities or assets so they can be owned, financed or valued more independently.
- Uncertainty avoidanceUncertainty avoidance describes the extent to which people feel uncomfortable with ambiguous or unknown situations in Hofstede’s national-culture model.
- Uncommitted facilityA borrowing arrangement under which a lender has no firm obligation to provide requested funds, subject to the contract.
- Uncontrollable costAn uncontrollable cost cannot be meaningfully influenced by the specified manager over the assessment period.
- Uncorrected misstatementsUncorrected misstatements are misstatements identified during an audit that management has not corrected.
- Under-absorptionUnder-absorption occurs when overhead absorbed into output is less than actual overhead incurred.
- Under-provision of income taxAn under-provision of income tax arises when the previous period’s estimated current tax charge was lower than the amount subsequently determined.
- Underlying assetThe underlying asset is the identified asset that is the subject of a lease, such as a specified vehicle or building.
- Underlying cultural assumptionsUnderlying cultural assumptions are deeply embedded, often taken-for-granted beliefs about how the organisation and its environment work.
- Underlying subject matterThe underlying subject matter is the phenomenon or activity measured or evaluated against suitable criteria in an assurance engagement.
- UnderstandabilityUnderstandability is enhanced when information is classified, characterised and presented clearly and concisely.
- UnderwritingAn arrangement in which an underwriter agrees, on specified terms, to take up or procure buyers for securities that investors do not subscribe for.
- UnemploymentUnemployment refers to people without employment who meet the applicable statistical criteria for seeking and being available for work.
- Unemployment rateThe unemployment rate expresses unemployed people as a percentage of the labour force under the applicable statistical definitions.
- Unethical behaviour in financial reportingUnethical behaviour in financial reporting is conduct inconsistent with applicable professional ethical principles or responsibilities.
- Unfair dismissal (Great Britain)Unfair dismissal is a statutory claim that a dismissal was unfair under the applicable employment law.
- Unfair dismissal remedies (Great Britain)Remedies for unfair dismissal can include reinstatement, re-engagement or compensation, subject to statutory conditions.
- Uniform accounting policiesA group uses uniform accounting policies for like transactions and events in similar circumstances when preparing consolidated financial statements.
- Unique resourceA unique resource is a resource or resource combination that competitors cannot readily obtain or imitate.
- Unitary boardA unitary board places overall direction and oversight within one board structure, commonly combining executive and non-executive directors.
- Unlimited liabilityUnlimited liability means owners can be personally responsible for business obligations beyond their investment, subject to applicable law.
- Unmodified opinionAn unmodified opinion is expressed when the auditor concludes that the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework.
- Unpresented chequesAn unpresented cheque has been recorded as a payment in the cash book but has not yet been processed by the bank.
- Unrealised profit in inventoryUnrealised profit in inventory is profit on an intragroup sale included in goods still held by the group at the reporting date.
- Unstructured dataUnstructured data lacks a consistent predefined record structure suitable for direct tabular analysis.
- Unsystematic riskRisk associated with a particular company or limited group of investments that can be reduced through diversification.
- UpsellingUpselling offers a customer a more extensive or higher-value version of the product or service being considered or used.
- Upstream supply chainThe upstream supply chain covers suppliers and the activities that provide inputs to the focal organisation.
- Useful lifeUseful life is the period over which an asset is expected to be available for use by the entity, or the expected number of production units.
- User auditorA user auditor is the auditor who audits and reports on the financial statements of a user entity that uses a service organisation.
- User entityA user entity is an entity that uses a service organisation and whose financial statements are being audited.
- Users of accounting informationUsers of financial information include existing and potential investors, lenders and other creditors, as well as other interested parties.
- UtilitarianismUtilitarianism is an ethical approach that seeks the greatest overall welfare across those affected.
V
- VAT Annual Accounting Scheme (UK)A scheme allowing an eligible business generally to submit one annual VAT return and make advance payments towards its liability.
- VAT Cash Accounting Scheme (UK)A VAT scheme under which an eligible business generally accounts for VAT when customers pay and reclaims eligible input VAT when it pays suppliers.
- VAT Flat Rate Scheme (UK)A scheme under which an eligible business generally calculates VAT due using a prescribed percentage of its VAT-inclusive turnover.
- VAT bad debt relief (UK)Relief that can allow a supplier to reclaim VAT already accounted for on an eligible unpaid debt.
- VAT group registration (UK)A registration treating eligible persons under common control as a single taxable person for VAT.
- VAT registration (UK)VAT registration brings a business within the VAT reporting and payment system, either compulsorily or voluntarily under applicable rules.
- VAT tax point (UK)A VAT tax point is the date that determines when a supply is accounted for VAT purposes.
- Valuation and allocation assertionValuation and allocation concern whether assets, liabilities and equity interests are included at appropriate amounts and related valuation or allocation adjustments are appropriately recorded.
- Valuation for financial reportingValuation for financial reporting is the determination of an amount for an asset, liability or other item using the applicable measurement basis.
- Value added (management performance)Value added in a management performance or incentive measure commonly represents sales or output value less bought-in goods and services, with the precise scheme definition stated.
- Value added tax (UK)VAT is an indirect tax charged on taxable supplies, with registered businesses accounting for output tax and eligible input tax.
- Value analysisValue analysis examines the functions a product or service must perform and how to provide those functions at appropriate whole-life cost.
- Value at riskA modelled loss threshold for a stated time horizon and confidence level, with outcomes beyond that threshold still possible.
- Value creation process (integrated reporting)The value creation process explains how an organisation uses resources and relationships through its activities to produce outputs and outcomes affecting the capitals over time.
- Value for moneyValue for money assesses how well resources are used, commonly through economy, efficiency and effectiveness.
- Value in useValue in use is the present value of future cash flows expected to be derived from an asset or cash-generating unit, determined under IAS 36 requirements.
- Value networkA value network comprises connected participants and activities that together create and deliver value.
- Value of rightsThe theoretical value of the entitlement to subscribe for new shares on the stated rights-issue terms.
- Value streamA value stream is the connected set of activities needed to deliver a product or service to a customer.
- Value-added activityA value-added activity contributes to a product or service function that the customer or relevant stakeholder requires.
- Value-based managementValue-based management aligns objectives, decisions, measures and incentives with creation of long-term economic value, commonly sustainable shareholder value in a commercial organisation.
- Value-chain data assuranceAssurance over value-chain data involves evaluating evidence for information obtained from suppliers, customers or other organisations outside the reporting entity.
- Variable considerationVariable consideration is contract consideration whose amount can change because of events such as discounts, rebates, refunds, bonuses, penalties or price concessions.
- Variable costA variable cost changes in total with the relevant activity level.
- Variable interest rateAn interest rate that changes according to a specified reference rate, reset mechanism or other contractual terms.
- Variable overhead efficiency varianceThe variable overhead efficiency variance values the difference between standard activity for actual output and actual activity at the standard variable overhead rate.
- Variable overhead expenditure varianceThe variable overhead expenditure variance compares actual variable overhead with the standard variable rate applied to actual hours or the specified activity base.
- Variable overhead total varianceThe variable overhead total variance compares standard variable overhead for actual output with actual variable overhead incurred.
- Variable production overheadsVariable production overheads are indirect production costs that vary with output and are allocated using actual use of production facilities.
- VarianceA variance is the difference between actual results and an appropriate budget or standard comparator.
- Variance (statistics)Statistical variance measures dispersion using the average squared deviations from a mean, with the divisor determined by the purpose.
- Variance investigationVariance investigation identifies which differences deserve attention and seeks evidence about their causes and consequences.
- Venture capitalEquity or equity-related finance provided to businesses with substantial growth potential, usually alongside active investor involvement and a planned exit.
- VerifiabilityVerifiability helps assure users that information faithfully represents what it purports to represent because knowledgeable independent observers can reach consensus.
- Vertical groupA vertical group is a group structure in which ownership passes through one or more intermediate entities.
- Vesting conditionA vesting condition determines whether the counterparty becomes entitled to cash, assets or equity instruments under a share-based payment arrangement.
- Virtual organisationA virtual organisation coordinates activities through networks of partners, technology and contracts rather than performing every function within one integrated hierarchy.
- Virtue ethicsVirtue ethics focuses on the character and practical judgment of a good person, including qualities such as honesty, fairness and courage.
- Voluntary auditA voluntary audit is an audit undertaken even though the entity is not required by law to have a statutory audit.
- Voluntary disclosureVoluntary disclosure is information an entity chooses to provide beyond what it is required to report.
- Voluntary stakeholderA voluntary stakeholder chooses to enter a relationship that gives it a stake in the organisation, subject to the circumstances.
- Vroom’s Expectancy TheoryExpectancy theory explains motivation through beliefs about effort leading to performance, performance leading to outcomes, and the value attached to those outcomes.
W
- Walkthrough testA walkthrough traces a transaction through a process from initiation to recording and reporting, helping the auditor understand the system and whether controls have been implemented.
- WantsWants are desired goods, services or experiences through which people seek satisfaction.
- Warranty in a customer contractA warranty is a promise concerning a product’s condition or service that may provide assurance, an additional service, or both.
- Weak-form efficiencyMarket efficiency with respect to information contained in past prices, returns and trading activity.
- Website development costsWebsite development costs are expenditure incurred in planning, developing or maintaining a website.
- Weighted average cost (AVCO)Average cost, or AVCO, assigns inventory costs using a weighted average of the costs of comparable units.
- Weighted average cost of capitalThe weighted average of the required returns on a company's financing sources, allowing for usable debt-interest tax relief where appropriate.
- Weighted average process costingWeighted average process costing combines opening work-in-progress cost with current-period cost and spreads the combined amount over equivalent output.
- What-if analysisWhat-if analysis explores how model outputs change when specified inputs or assumptions are changed.
- White knightA more acceptable alternative bidder sought or welcomed by a target facing an unwanted acquisition proposal.
- White squireA white squire is a supportive investor that acquires a stake intended to help a target resist an unwanted control bid.
- Wide stakeholderA wide stakeholder, in the narrow–wide classification, has a less close or less dependent relationship with the organisation than its narrow stakeholders.
- Window dressingWindow dressing is action intended to make reported financial position or performance appear more favourable, particularly at a reporting date.
- With-recourse factoringFactoring under which the supplier retains the agreed risk of customer non-payment and may have to reimburse the factor.
- Work in progressWork in progress is production that has started but is not yet complete at the measurement date.
- Work orientations (Goldthorpe and colleagues)Work orientations associated with Goldthorpe, Lockwood and colleagues distinguish instrumental, bureaucratic and solidaristic perspectives.
- Working capitalWorking capital is current assets less current liabilities, a measure of net short-term resources.
- Working capital funding policyThe choice of short-term and long-term finance used to support permanent and fluctuating asset needs.
- Working capital investment in appraisalCash committed to the additional operating working capital needed by a project, with subsequent increases, decreases and recoveries included at their stated dates.
- Working capital investment policyA business's approach to the amount of inventory, receivables and cash it holds to support operations.
- Workplace diversity and inclusionWorkplace diversity concerns the range of backgrounds, characteristics, experiences and perspectives among people at work.
- World Trade OrganizationThe World Trade Organization is an international organisation through which member governments administer trade agreements, negotiate and address trade-policy issues.
- Writing-down allowance (UK capital allowances)A writing-down allowance is a capital-allowance deduction calculated on the qualifying tax pool or asset balance.
- Written representationA written representation is a written statement by management provided to the auditor to confirm certain matters or support other audit evidence.
- Wrongful dismissal (Great Britain)Wrongful dismissal concerns an employer’s breach of an employment contract when dismissing an employee.
- Wrongful trading (UK insolvency law)Potential director liability where there was no reasonable prospect of avoiding insolvent liquidation or insolvent administration, subject to statutory conditions and defences.
Y
Z
E