Subject Overview
This subject covers a critical review of developments in accounting theory and professional standards including the search for a conceptual framework, the evaluation and comparison of various accounting models and discussion of contemporary management accounting and financial reporting issues.
Learning outcomes
On successful completion of this subject, you should
- be able to critically evaluate attempts to develop and apply a conceptual framework;
- be able to critically appraise the objectives of accounting and relate them to the various concepts of accounting discussed in earlier subjects;
- be able to analyse the possible usefulness of alternative measurement systems to historical cost;
- be able to critically evaluate selected current financial reporting and management accounting issues.
Review of Current Accounting Issues
Task
In your accounting career you will be required to analyse current accounting issues and communicate your theoretical understanding to your professional colleagues and your clients. For this assignment assume that you are the senior accountant working for a major firm.
Question 1 (1,500 words)
The CEO has forwarded to you an interesting article and requires you to provide her with a deeper theoretical understanding of the issues discussed so that she can fully engage in the lively discourse at an upcoming conference.
You are required to find a newspaper article or web page report of an item of accounting news, i.e. it refers to a current event, consideration, comment or decision that has been published after the 1st of June 2016. Your article could also come from one of the professional journals. The article should not come from an academic journal. Academic journals generally do not contain news articles or articles of less than one page and are usually only published 2 or 4 times a year. If you are having a problem ensuring that your article is from an appropriate source contact your subject coordinator.
You then need to explain the article that you have found in your own words and clearly relate the concepts, ideas and facts within the article to one or more of the theories or topics that you have studied this session. Support your analysis of the assumptions and implications of the topic or theory as appropriate with reference to sources in APA 6 style. For example, this article (https://www.smh.com.au/business/retail/target-scandal-claims-another-victim-20160412-go43jz.html)f the Sydney Morning Herald in April could be linked to the topics of accounting regulation and measurement (and perhaps others). You must provide a copy of the article or web page, with details of the source, date and page number with your answer.
Question 2
The Senior Partner of the firm you work for has appointed you to a new role. It is now your responsibility to review upcoming accounting standards and provide a report to the partners on the proposed standard and the opinions of other industry players on the changes.
Firstly, you are required to find a current exposure draft or proposal for a new accounting standard which has been opened for public comments. (These can be found on the websites of most standard-setting organisations, such as the IASB, AASB and FASB. Hint: These websites can be quite difficult to navigate, so as a first step try typing "IASB exposure draft and comment letters"/"FASB exposure draft and comment letters" into Google or other search engine of your choice). Read a sample of the comments from a range of respondents. Select four respondents, ideally from different types of organisations for example, from accounting bodies, industry, companies or corporate bodies. If you are having a problem finding suitable comments letters then contact your subject coordinator.
In your own words, supporting your evaluation with appropriate citations, appropriately referenced in APA 6 style, you are required to include the following information in the report.
a) Introduce the major issues in the new standard
b) Explain if there is generally a consensus or if there is disagreement between the commenting parties. Examine in detail why some parties may have a dissenting point of view.
c) Analyse the assumptions behind public interest, private interest and capture theories and evaluate which one best explains each of the comment letters.
Academic Writing and Referencing ASIC calls for clarity in reports
Staff Reporter -
Friday, 03 June 2016
https://www.accountantsdaily.com.au/tax-compliance/9182-asic-calls-for-clarity-in-reports
ASIC has called on auditors and directors to apply "realism and clarity" to financial reports this reporting season.
In a statement, the regulator said it expects companies to adopt realistic asset valuations, appropriate accounting policies and better communication of this information in the lead-up to the end of financial year reporting season.
Announcing its focus areas for 30 June financial reports of listed entities and other entities of public interest with many stakeholders, ASIC highlighted key problem areas to address.
"Directors and auditors should continue to focus on values of assets and accounting policy choices," the regulator said.
"We continue to see companies use unrealistic assumptions in testing the value of assets or that have applied inappropriate approaches in areas such as revenue recognition," ASIC Commissioner John Price said.
"We will select financial reports both looking at risk-based criteria and also from a random selection."
ASIC highlighted asset values, accounting policy choices, material disclosures, the role of directors and client monies as areas of focus.
More information can be found on the ASIC website.
IFRS Principles of Disclosure
IASB work plan
https://www.ifrs.org/Current-Projects/IASB-Projects/Pages/IASB-Work-Plan.aspx
Disclosure initiative: principles of disclosure
https://www.ifrs.org/Current-Projects/IASB-Projects/Disclosure-Initiative/Principles-of-Disclosure/Pages/Home.aspx
Discussion papers
https://www.ifrs.org/Current-Projects/IASB-Projects/Disclosure-Initiative/Principles-of-Disclosure/Pages/Discussion-and-papers-stage-2.aspx
Agenda paper 11a
https://www.ifrs.org/Meetings/MeetingDocs/IASB/2016/April/AP11A-Disclosure-Initiative.pdf
IFRS Practice Statement Application of Materiality to Financial Statements: Exposure Draft and Comment Letters (ED/2015/8)
https://www.ifrs.org/Current-Projects/IASB-Projects/Disclosure-Initiative/Materiality/Exposure-Draft-October-2015/Pages/default.aspx
Exposure Draft
https://www.ifrs.org/Current-Projects/IASB-Projects/Disclosure-Initiative/Materiality/Exposure-Draft-October-2015/Documents/ED_IFRSPracticeStatement_OCT2015_WEBSITE.pdf
Comment letters
https://www.ifrs.org/Current-Projects/IASB-Projects/Disclosure-Initiative/Materiality/Exposure-Draft-October-2015/Pages/Comment-letter.aspx
Attachment:- Disclosure-Initiative.pdf