Task In your accounting career you will be required to analyse current accountin

Question

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 2 - 1,500 words

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.

An outline of the major issues covered in the exposure draft (what is the exposure draft introducing or changing?).

An outline of the views presented in the comments letters which highlights the areas of agreement and disagreement with the exposure draft.

An assessment as to whether the comments letters can be interpreted as being 'for' or 'against' regulation, which provides relevant examples.

An application of each of the theories of regulation (public interest, private interest and capture) to the comments letters and a critical evaluation of the effectiveness of each theory is at explaining the comments letters.

Please note: you need to attach the comment letters you selected for your report (there is no need to attach the exposure draft)

Explanation / Answer

ANSWER: :

Issue with respect to Accrual practice of Accounting:
With reference to the article about conventional accounting practices of Noble, published on May 1, 2018, 500 AM, it is implied that the group clurently follows the concept of accrual system of Accounting Under this approach, the incomes and expenses are documented as and when they occur Asa result, the identification of incomes and expenses differs from the inflows and outflows M ash The revenue might have been earned, but the income in cash may be received later due to grant of credit facilities Sin.ar occurrence can happen with respect to e,enses Asa result, the cash flows do not match with the profit and loss statement The thanintends to match the profit and loss statement with cash profit To facilitate the same, the company calculates the difference and reserves it against the gain The company's practice is not prohibited by any standard The amount that a company can transfer to its reserves is not restricted by any regulation
The issue with accrual system of Accounting is that the profit and loss does not depict the accurate picture of cash available with the rum
Issue with respect to measurement practices and regulation of Accounting:
With respect to the measurement practices in Accounting, the Chairman of the company, Mr. Brough has made the following statement:

* `The shareholders should not be stunned by the events of the past few months, saying that the "approaching and shove" between various groups of stakeholders is par for the course in a consensual restructuring w here there is no programmed pecking order of claims.' Noble investor Goldilocks Savings Company has accused the firm of inflating its bottom tine through overly high valuation of long-term contracts and derivatives.
The measurement must be made in compliance with 1.5 9 Financial instruments
1.5 — 9 provides d,ection on arrangement and assessment of economic instruments Under 1.5 -9, an economic instruments are initially considered at fair value plus or minus, in case of financial asset or financial liability not a fa, value through profit or loss, transaction costs. An asset is classified as financial asset initially, however, if cetiAn conditions are met, the assn can be reclassified All financial assets are measured A amortized cost or fair value through other comprehensive income (INTOC1) or fair value through profit or loss (FVTPL) The statement of Mr. Brough approaching and shoving is par for the course in consensual reorganization cannot be justified

The effect of reorganization can be given in books of Accounts only after the approved conditions are met If a board's decision for reorganization is the only applicable event arising before the end of the reporting period, this is not enough to aeate a beneficial commilmon The conditions for recognizing a reorganization provision require the plan to be detailed and specific, to have gone beyond the directors' powers of recall, and to be executed without delay or significant alteration.

The reorganization provision is measured at the best estimate of the spending required to settle the present responsibility, taking into account the risks and uncertainties of the obligation and when the time value of money is material, discounting to present value A restructuring provision includes only the direct expenditures arising from then which are those that are necessarily entailed by the restructuring and not associated with the ongoing activities of the entity The costs often incurred as part of reorganization include employee termination benefits under a one-time termination plan contract extinction costs and costs to consolidate or dose a facility In the given article, the restructuring has not yet been finalize to no compromise has been obtained on reorganization between the company, the bondholders and shareholders

The Directors fees paid must be in agreement with the relevant rules The companies must make some disclosures regarding payment of management compensation The companies must submit directors' Ram]t report including the detailed information about each director's payment The directors' payment includes a value placed on share based payments and pension benefits using calculations agreed in the regulations. The directors' remuneration report is split into two parts.

In addition to dealing with historical payment, there exists a policy repo.

This is subject to a binding shareholder vote and a company win be in breach of the law S it pays remuneration to directors outside the approved policy The statement of . Brough.
`Since I joined last May, we've had 40 board meetings... I think the directors' lees are self-effacing in similarity to other companies' and the work they have been asked to do." The turnout yesterday was notably smaller than past shareholders' meetings' cannot be considered without a proper explanation for conducting 40 meetings and proper of about the plan of the meetings and the outcome of the same.

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