Unit Learning Outcomes: The purpose of this assignment is to assess the following Learning Outcomes:
1. Explain, describe and demonstrate mastery of the financial accounting standard setting process of Australia.
2. Critically analyze and interpret current issues and developments in accounting theory and financial reporting.
Assignment Description:
In developing an accounting standard, accounting standard setters must choose the most appropriate accounting policy from a range of alternatives. The choice that they make is critical because it virtually determines accounting practice (Henderson, 2017). If there is no accounting standard, or if the standard either implicitly or explicitly allows a choice, the preparers of General Purpose Financial Statements (GPFS) must select the most appropriate policy for use in the preparation of those statements by exercising their professional judgement (Framework 2014).
It is widely argued that accountants are not free to make any accounting policy choice they like, because their behaviour is governed by some form of regulation, including government and non-government regulation, accounting concepts and standards, and professional ethics.
Australian Accounting Standard Board (AASB) adopted same due process applied by International Accounting Standard Board (IASB) in the preparation of accounting standards and adopted IASB's Accounting Conceptual Framework in 2005. The conceptual framework is viewed as a normative accounting theory because it prescribes how accounting policies should be determined (Henderson, 2017). Choosing accounting policies required a consideration of four issues. They are defining, recognizing, measurement and disclosure of elements of financial statements. The role of the Framework 2014 for the preparation and presentation of financial statements is to guide accounting standard setters and financial statement preparers in how to resolve these four issues. However, Conceptual framework 2014 has not yet developed guidance on what principles should underlie disclosure practices.
With reference to the above requirements/arguments, you are required to write a report critically evaluating implications of the development of AASB standards and conceptual framework for financial reporting in Australia.
In your report:
1. Critically examine institutional and regulatory arrangements in financial reporting in Australia.
2. Evaluate the due process employed by the AASB in the developments of accounting standards.
3. Investigate main features of the AASB approach to developing interpretation of accounting standards.
4. Explain how accounting standards are enforced by the capital market regulator (ASIC).
5. Examine why conceptual framework 2014 has failed to provide guidance on what principles should underlie disclosure practices.
6. Your recommendations
Henderson, S., Peirson, G., Herbohn, K., Artiach, T. and Howieson, B. (2017). Issues in Financial Accounting (16th ed.). AU: Pearson Higher Education.
This assignment must be written/structured in the form of a 'business report'. That is, it must have a/an;
(a) Executive summary (between 100 to 150 words),
(b) Introduction that; Succinctly summarizes this assignment's topic and its key issues, controversies, etc. (no more than 200 words), and
(c) Body that addresses all the requirements - see above 1-6 (no more 1500 words),
(d) Conclusion that sums up the mains issues of this assignment (no more than 200 words), and
(e) Reference list containing all cited works.
(f) Proper English Grammar, appearance, format, etc. At least 2 recognized journal article should be cited.
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