Advanced Accounting

This assignment is based on the proposed changes to Chapters 1 and 2 of AASB Exposure Draft, Conceptual Framework for Financial Reporting, published in June 2015 by the Australian

Accounting Standards Board (AASB). You can find a copy of this discussion paper and other useful documents in the week 3 folder under Learning Materials link on vUWS site for Advanced Accounting. The Exposure Draft ED 264 is also available from the AASB web site,
http://www.aasb.gov.au

Chapters 1 and 2-The objective of general purpose financial reporting and the qualitative characteristics of useful financial information In 2010, as part of a joint project with the FASB, the IASB issued two chapters of a revised Conceptual Framework. These chapters deal with the objective of general purpose financial reporting and the qualitative characteristics of useful financial information.

When the IASB restarted work on the Conceptual Framework project in 2012, it decided not to fundamentally reconsider these chapters. However, many respondents to the Discussion Paper stated that the IASB should reconsider one or more aspects of these chapters. In response to these comments, the IASB now proposes:

(a) To give more prominence, within the discussion of the objective of financial reporting, to the importance of providing information needed to assess management's stewardship of the entity's resources (see paragraphs 1.3-1.4, 1.13-1.16, 1.18, 1.20, 1.22-1.23 and BC1.6-BC1.10);

(b) To reintroduce an explicit reference to the notion of prudence (described as caution when making judgements under conditions of uncertainty) and state that prudence is important for achieving neutrality (see paragraphs 2.18 and BC2.1-BC2.17); and

(c) To state explicitly that a faithful representation represents the substance of an economic phenomenon instead of merely representing its legal form (see paragraphs 2.14 and BC2.18-BC2.20).

Some respondents to the Discussion Paper raised concerns that, since 2010, the Conceptual Framework has no longer identified reliability as a qualitative characteristic of useful financial information. Their main concern seems to be that measurement uncertainty makes financial information less useful. In response, the IASB proposes to clarify that measurement uncertainty is one factor that can make financial information less relevant. Hence, there is a trade-off between the level of measurement uncertainty and other factors that make information relevant (see paragraphs 2.12-2.13 and BC2.24(c)). Other aspects of reliability, as it was described in the pre-2010 Conceptual Framework, are very similar to aspects of the qualitative characteristic of faithful representation, as described in the existing Conceptual Framework and in the Exposure Draft. The IASB thinks that the term ‘faithful representation' describes those aspects better than the term ‘reliability'.

To help respondents provide comments, the proposed changes to these two chapters are shown in mark-up. The IASB is not requesting comments on other aspects of these chapters and does not expect to make substantive changes to the other aspects of these chapters.

Requirements:

The ED264 has been released for comment and you are required to act as a respondent, taking on one of the stakeholder perspectives listed below for the purpose of providing detailed response/comments to the questions on page 10 of the ED264 (and are listed below).
Stakeholders

• Company in the Banking Industry

• Company in the Mining Industry

• Company in the Manufacturing Industry

• Lender/Creditor

• Accounting firm/Auditor

• Professional Accounting body

In your response/comments make sure you consider the relevance of the specific technical and theoretical issues, and changes rise in these questions from your nominated perspective. You should also consider how such changes/proposals would benefit and/or disadvantage the stakeholder. You might also like to consider the theoretical implication of accounting information produced from the perspective of your nominated stakeholder.

From your chosen perspective, you must

a. State whether or not you support each of the following five (5) proposals

b. Give reasons for your position in relation to each proposal

The specific proposals (from page 10 of ED264) are

1. To give more prominence, within the objective of financial reporting, to the importance of providing information needed to assess management's stewardship of the entity's resources;

2. To reintroduce an explicit reference to the notion of prudence (described as caution when making judgements under conditions of uncertainty) and to state that prudence is important in achieving neutrality;

3. To state explicitly that a faithful representation represents the substance of an economic phenomenon instead of merely representing its legal form;

4. To clarify that measurement uncertainty is one factor that can make financial information less relevant, and that there is a trade-off between the level of measurement uncertainty and other factors that make information relevant; and

5. To continue to identify relevance and faithful representation as the two fundamental qualitative characteristics of useful financial information?

Objectives of the Assignment:

One of the key objectives of this assignment is to assist you to develop effective written communication skills which are crucial to gaining employment and ongoing career success.

In the 2014 Graduate Outlook report employers were surveyed about the most important selection criteria when recruiting graduates. It is evident in the table below those employers' rate communication skills as their number one priority when recruiting graduates across the board.

Source: Graduate Careers Australia, 2014, Graduate Outlook 2014, Melbourne

Since 2012, the Australian Parliament legislated that all higher education providers are required to provide evidence that their graduates achieve a common national set of learning outcomes by the time they graduate. Minimum or threshold learning outcomes (TLOs) for accounting graduates were developed collaboratively across Australia in 2010 with input from the professional accounting bodies, various business practitioners and accounting academics. Five TLOs were developed for the accounting discipline of which the communication standard is particularly relevant for this assignment.

Bachelor graduates in Accounting will be able to justify and communicate accounting advice and ideas in straightforward collaborative contexts involving both accountants and non-accountants.

Please keep this TLO in mind when preparing your assignment. The Criteria and Standards for marking the assignment are on page 5. Use this to help you prepare your answer to the assignment.

It shows what we will be looking for in marking and what mark you will get if you reach certain levels.

It is important to use appropriate referencing. If the reader of your report wants to further follow up any of the points you have made, correct referencing of the material is essential. You do not want the situation where the reader has to contact you to find out where the material came from!