Problem:
The regulatory environment and financial reporting
Assume that you are a member of a large accounting firm which is responsible for preparing financial reports, including statements and notes to the accounts; and for advising staff in client firms who are responsible for preparing financial reports.The firm only deals with large Australian companies listed on the Australian Stock exchange. You have been asked to prepare a short newsletter for the purpose of alerting staff to changes and developments in financial reporting over a 3 week period.
You are required to:
- Monitor changes and developments in the financial reporting environment by monitoring a range of sources (including professional websites and publications, newspapers, websites of a variety of organizations including the AASB, IASC, ASIC, FASB,ASX) for a 3 week period, and
- Prepare an accounting newsletter (in accordance with the formatting instructions below) alerting staff to significant changes/developments or items of interest.
Monitoring of changes and developments
This will involve regular monitoring of a number of sources over the required period. The sources should be varied in range, as you will need to identify and consider developments/changes relating to:
- Technical issues such as issue of new accounting standards, exposure drafts or other pronouncements or interpretations.
- Regulation and monitoring of financial reporting.
- Political influences or other potential developments (such as identification of any reporting failures) that could impact or may be of interest to staff (such as Enron or the more recent Parmalat failure). 'Political' does not only mean action from politicians - it would also include lobbying/actions by other groups to promote their own interests - for example there may be articles about companies, or particular interest groups such as Group of 100, saying that if certain accounting standards are introduced this will disadvantage or have a negative impact. This would also be considered 'political'.
You will need to consider both local (Australian) and international sources and developments. A section on 'international' items/developments must be included in the newsletter. This should not be restricted to the IASB.
Additional Information:
The question is from Finance and it s about preparing news letter reflecting changes in financial reporting environment. In the above question information regarding regular changes in financial environments and, accounting practices and such developments from various sources has to be collected as well as transmitted to accounting teams deployed in different Australian companies. The solution discusses this comprehensively.